Unlike a lot of fund managers and business people, President Trump really destroyed my business model. In its most simplest form, I see pure capitalism, or what I call pro-capital policy as being inherent deflationary. If you look at the performance of S&P 500 versus US treasuries, the performance has tended to align, and periods of outperformance in equities, like the dot com boom, then sees the reverse with the GFC. However Trump changed the rules, and Biden has followed. The rules of the game is that Treasuries are piggy bank for government to distribute largesse to its constituents. Equities rip, and bonds dip.
Looking back at 2016, and thinking about the swing voters that matter these day - rust belt blue collar workers - when faced with the choice of Clinton or Trump, Trump was by far the most appealing to pro-labour voters. Clinton represented establishment, and ever worse, lawyers.
In 2020, with a Biden v Trump match up, for a pro-labour voter you were faced with a President that had indeed at least tried to boost labour income, even if it was too disorganised to actually work, against Biden, who was very definitely a pro-union and pro-labour politician. And in power, Biden did work very hard to be pro-labour. If he was 10 years younger, who knows that this election would hold.
But away from the US, the pro-labour trend in politics has been very strong. In the UK, we saw ex-hedge funder, banker, consultant Rishi Sunak vs public servant lawyer, and saw the conservative party suffer huge losses, not only to labour but too Nigel Farage’s new party.
In India, Modi also saw a reversal, as many of his pro-business policies alienated lower caste Indian, as well as other voters. In France, Macron lost heavily to pro-labour forces on both the left and the right. In Japan, the LDP has just suffered a large loss of seats, and was very much the part pro-capital politics. So the question for me, who is the pro-labour candidate in Harris vs Trump?
This is a surprisingly tough question. Trump is tariff man - which is popular with unions. But he is also “tax cut” man for big business. He also chose JD Vance to go up against Tim Walz - who is clearly the most pro-labour politician on the ticket. I feel that tax cuts for business and JD Vance are two huge mistakes for Trump - and without these two “policy choices” would likely romp it in. Kamala is tough - she is labelled as a radical Marxist because of her father - but I am not sure that is damaging as Republican believe. Would she fight for pro-labour policies as hard as Biden? Maybe, but hard to tell. Election betting odds favour Trump at the moment.
My guess for what it is worth is that Harris does much better than expected. I suspect that she will win the popular vote by quite a large margin, and that is enough to squeak a victory. In all the election results this year, the vote for pro-labour has been underestimated, and I think Trump has kicked a few own goals in pushing tax cuts and JD Vance.
Funnily enough, a Harris win will have no long term effect on markets. Even if Trump gets too old to campaign for 2028, his effect on politics will remain until the bond market blows up, and pro-capital policies become popular again. We are years from that - even if the trend is already moving that way..
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