The New Look American Government
Did the majority of business-owners feel warmly about the soon-to-be replaced Obama Administration?
Is there an audience working hard to delegitimize President-elect Donald Trump because he didn’t win the popular vote?
Back to College?
To the latter question, the US Constitution provides for an Electoral College, not the popular vote, to determine the winner of Presidential elections. That said, America’s electoral college has never overturned an election result.
And yet, while some 538 presidential electors met recently for the traditional formalistic footnote to the outcome of the November election, that didn’t stop the Black-Swan hunters trying to frighten anyone who would listen into believing that the outcome would change.
(Bring on the Russian hacker conspiracy theories – similar to reports that “they” also tried to hack the Republican National Committee too. Apparently “they” were blocked by spam filters.)
The Bigger Issue
As Dr Ed Yardeni points out, "The fact that we’re even discussing the prospect of electors going rogue is an example of how polarized our political system has become."
It could have been even worse; say if the country had voted for Trump and gridlock.
But even with majorities in both houses of Congress let’s not blindly assume he’ll get his way on everything he proposed during the campaign.
It’s more likely he will surprise us with an effort to find middle ground, something which might even cause tempers to quiet back down a bit.
Dealmaking Demands Flexibility
...and if they are good at it, dealmakers often find they need to remain open and flexible to get things done.
Mr Trump has throttled back on some of his more extreme ideas. He is also doing what many thought he would not do: Surrounding himself with some pretty sharp people, even those with different viewpoints.
The result? This is not likely a kiss-ass Cabinet.
Look at the pick for Commerce: Wilbur Ross stated he too wants to renegotiate some of our trade treaties, not destroy them. He views tariffs as last-straw measures.
The better news?
He got where he is in life by being a good dealmaker too.
So, now we’ll find out if dealmakers and successful business people with low levels of government experience can bring about positive results?
It will surely be a change from the last eight years, where government was run by community organizers.
Dealmakers Like Making Deals
That could explain Rex Tillerson as the pick for Secretary of State.
He has done many deals with the Russians, and is likely to push for better relations with them. Of course, we can be assured that the media will mostly focus on the negatives.
By now we should know: It sells a lot more ads and clicks if you jazz the audience up with talk of Trump being a friend of Russia.
My hunch is that some global leaders are getting a bit more chatty because they’re pretty certain the US will not be able to be pushed around as easily as we have been for the last eight years.
It will take a while, but having a new sheriff in town is likely to be a good thing.
And let’s hope that Trump makes some progress in “draining the swamp.”
Personally, I am encouraged to see that the first item on Donald Trump’s "Contract with the American Voter" is term limits on all members of Congress.
Clearly one important element early in the process will be to see that Trump’s tax cuts really do benefit middle-class families and small business owners.
If so, then the market has only begun to price in new values for business across the sector spectrum and in many channels.
Fed Head Chatter
In the midst of all of this, the US Fed interest rate hike came and went. There is still plenty of liquidity in the marketplace which is why we suggested that this did not tighten things.
Some have been clamouring publicly for fiscal stimulus for many meetings. And it’s becoming clearer that they wanted it because it will allow them to get monetary policy back to normal again more quickly.
They’ve feared that rates have been too low to allow any room should the US economy encounter a sudden negative shock.
Getting a couple more under our belt will be a good thing. The combined effects of new fiscal stimulus, repatriation benefits and the tax cuts as Trump rolls in should help the audience move their mental focus off the Fed and on to better growth ahead.
In other words, the pace of increases shouldn’t fully counteract the expected fiscal stimulus to come.
And Now, 2017?
If we get a rocky start to 2017, as we saw in 2016, the message will stand tall in the storm again: We will stay focused on the long-term benefits baked into the US economic system.
Those elements can live with rate hikes or cuts, inflation or no, this Fed leader or another.
And the beauty of the demographic trends from which we are set to benefit is that they will be in place for the next 30 plus years.
While the message is designed to remain simple, it should never to be confused with easy; stay the course, be patient and keep your eye on the long-term horizon.
The early 1980s playbook is being dusted off again with a few new twists.