Lets review the facts.
- The Iowa caucuses confirm that there are a lot of angry American voters out there – Right and Left.
- The market tanks 2% the next day.
- None of my market-focused news/commentary sources draw any connection between “1” and “2” above.
OK so part of the market swoon is probably Oil and Exxon’s bad earnings and etc. But maybe just a teensy weensy bit might be the growing wave of anti-establishment sentiment out there in flyover land? The political reporters have been on this for months. The market reporters are still deep in the Davossian bubble.
The idea of serious political risk is still not really on the table. Sure we’ll probably get another Democratic president, but she is just another fellow Davos attendee. Part of the post-Clinton/Rubin/Summers Democratic embrace of the plutocratic agenda. Meet the new boss, same as the old boss. So we’ll get a few gestures toward the little people and we can all go back to mutual backscratching… Or at least that’s where the consensus seems to remain.
Iowa points in a very different direction. It already seems clear the post (Bill) Clinton “Davos Era” of centrist, plutocrat-friendly government is fading. We are entering a very different political risk environment. Yet most market players only talk/think about “political risk” in terms of emerging markets.
We could be in for a rough ride. Especially sectors sucking off the fattest teats – banking, energy, healthcare/pharma, and defense. I think most technology companies still do OK. At least I hope so…
PS: The tone/tenor of the next era remains is not yet clear. I still think we are on a 20-30 year shift leftward (after the 20-30 year shift rightward kicked off by Reagan and ended by Bush the 2nd). I remain more surprised by Sander’s success than Trump’s. His message would have been inconceivably fringe even in the 2008 election. But I could well be wrong. We could end up with an ugly nativist era that I am just desperate to avoid contemplating. We all have our blind spots.
PSS: How weird is it that the “establishment” Republican Rubio’s 3rd place finish is getting held up as some sort of victory? Seems mostly evidence of the thicknesses of the Davossian bubble-wall.
PSSS: I checked and Bernie Sanders has never been to Davos. He was likely not invited out of principle (and his prior un-importance). Ted Cruz also hasn’t been. He was likely not invited because he’s a slimy self-serving jerk. But I digress….