Election Year Market Insecurity – on Steroids

I’ve written a great deal in this blog about economic uncertainty and how it affects our finances and outlook for a secure retirement. While the world at large is afflicted by uncertainty, here in this country we’re faced with an aspect of the problem I haven’t discussed – national politics.

The volatility of this election year (and we’re only in May, people!) has thrust us into an unprecedented storm. What we thought would become our traditional quadrennial crapshoot between known-quantity Republicans and Democrats has devolved into a comic opera – but one with serious consequences. Although we shouldn’t rule out the possibility of an outlier, which wouldn’t improve the market outlook, it now appears likely Hillary Clinton and Donald Trump will be squaring off for the big prize on November 8th.

The big difference this year for the stock market is how the campaign financing shakes out. American voters currently are confronted with two big ironies. The first – the candidate with the biggest war chest by far, Hillary Clinton, publicly vowed four years ago her bid for the high office this year would include the reform of a campaign financing system that’s “dysfunctional.”  Apparently these days, with the dysfunction working in her favor, she’s made peace with it…

The second big irony of the current presidential contest is Clinton’s counterpart, Republican billionaire Donald Trump, is fresh out of campaign funds. Wall Street is supporting Clinton with their cash, if not their enthusiasm; and Trump, with hat in hand, has had to appeal for help to the same Republican donors he’s been trashing. The Donald can no longer afford to go it alone funding his own campaign.

A Republican who’s broke? A Democrat with money? Who’d have thought? But it turns out Hillary Clinton has received more campaign funding from Wall Street than all other candidates combined. In March alone she received $344,000 from the financial services sector.

Since the beginning of her campaign, she’s received over four million dollars from Wall Street. Through April, she raised a total of well over two hundred million dollars.In fact, some Wall Street donors to the campaigns of Jeb Bush and Marco Rubio have now switched over to become Clinton contributors.

Trump, on the other hand, has raised a total of forty-nine million dollars through March, thirty-six million out of his own pocket. But, perhaps counter-intuitively, through March, less than one percent of his funding has come from Wall Street in any one month.

As far back as March, Barron’s quoted  Greg Valliere, chief strategist at Horizon Investments and “well-known handicapper of the political scene,” as saying he’s aware of several professional investors who are contemplating “holding their nose and voting for Hillary.”  Politico puts it a touch more suavely, saying Wall St.’s view of the current Republican frontrunner is that “Trump is anything but generic, with historic unfavorables that surpass even Clinton’s significant ones.”

So what’s driving Wall St.’s lopsided backing of Clinton?  Uncertainty.  Every presidential campaign causes some anxiety, but this one is off the charts – and again, it’s only May.  We still have six more months of this, and it’s only going to get worse.

Traditionally, the candidate seen as most pro-business has a lock on Wall St., but the big financiers are not buying into the Donald’s red tie or his stiff import-duty, trade-agreement-shredding speeches. Like the rest of the country, Wall Street is insecure, particularly with 2016’s ugly market start.

In general, but especially in this jittery economic climate, those in power never favor a loose cannon. And despite his wide appeal to voters nationwide, that’s precisely how the one percent perceives Trump. So they might just swallow the bitter pill and back Hillary Clinton as the protector of business-as-usual.  The question is, while she may be the candidate who protects their interests, how will you fare?

Perhaps that’s one private reason why so many high-profile investors are telling us to exit the market and take shelter in gold.


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