Clinton vs Trump: Dictator or Deal Maker? What Will It Mean for the Markets?
Clinton: Clinton has been campaigning on reform and change with an emphasis on restoring the middle class. Wall Street excesses must be reigned in and only she can make this happen she says. With her experience in the White House and as Secretary of State in the Obama administration, she posits that she is the only candidate with the experience that America needs.
Critics however point to her experience as a detriment and note that it was under her husband’s administration that legislation was passed that led to the financial crisis of 2008. They list the repeal of Glass-Steagall legislation and changes to the Community Reinvestment Act as being directly responsible for the subprime debacle that led to the worst financial crisis since the great depression. Others find it puzzling, that Clinton, being the candidate that has accepted the most money from Wall Street can even be considered credible.
Additionally Clinton has jumped on the climate change bandwagon and indicated that more costly regulations will be instituted to manage carbon sequestration while simultaneously expanding government funding and involvement in the green energy movement and that the economy will do better as a result. However, we have all seen the governments’ handiwork in this area; Solyndra, SunPower, First Solar as well as dozens of others have had disastrous outcomes at taxpayers’ expense. Although Clinton has backpedaled slightly from earlier remarks that coal miners would be put out of business, the energy industry is still very concerned about just how damaging a Clinton administration would be to an already ailing industry. Additionally there are concerns that Clinton’s dictatorial and strident approach will bring with it draconian actions that will result in an even more burdensome and costly business climate that will encumber innovation and hamper productivity, creating an even more difficult business environment for companies to operate and especially for small and medium sized business, the job creators.
Given Clinton’s track record, with her husband Bill’s administration and as Secretary of State during the Obama presidency, one could expect the trend to continue. Growing deficits, higher taxes directly as well as indirectly through increased regulations, mediocre growth, faltering job creation, crony capitalism, a continued decline of the middle class and a market that is influenced more by fed policy announcements rather than core economic fundamentals, in the case of Clinton administration the trend may not be your friend.
Trump: Trump the deal maker has been campaigning under the theme Make America Great Again. Implying that what has been done to America by the political class is not so great and is in fact bad. He points to the decline of the middle class, the loss of manufacturing jobs, record trade and fiscal deficits, wasteful government spending, crony capitalism, and trade deals that have been bad for America. Trade deals that he says were only passed because the political class has bought and paid for global interests that do not have America’s best interests at heart.
Trump says America has to start winning again and stop being taken advantage of. An examination of the statistics would actually confirm Trumps assertions. But what is his solution? Trump has stated that he will ask China to let the Yuan increase in value according to free market principles, Trump also said that he will look at imposing tariffs on imports to help level the playing field for companies at home, Trump says he wants fair trade for America. Additionally Trump has stated that he will eliminate costly and burdensome regulations and red tape for business and reform the tax code so that businesses will invest in America which will stimulate growth at home resulting in more and better jobs for Americans.
The reaction was one of shock and fear as opponents pointed out that Trump policies intended to reduce trade deficits would do damage to the middle class because of increased prices for consumers. Trump, however answered and pointed out that leveling the playing field for American companies would encourage more investment and manufacturing at home resulting in higher paying jobs and thus more disposable income ultimately contributing to the restoration of the middle class, a core pillar in Trumps Make America Great Again campaign.
He pointed to the devastation so called free trade has inflicted on America’s industrial heartland and even provided current examples illustrating that the carnage is in fact continuing and must be stopped. His opponents were left tongue tied and stumped with no real answer. Trump also said he would cut taxes for the middle class and pay for it by eliminating government waste to help stop the decline of America’s once thriving middle class and manufacturing sector.
A Trump presidency may indicate some initial reactionary volatility followed by a steady increase in market confidence and optimism. If Trump can do what he says he will do and many believe he will try, then America’s best days may yet be to come and the markets will affirm.