With the 2018 midterm elections coming, the political season is already in full swing.
How does the rest of the world view our leadership and laws? Will the smart money stay on the sidelines for 2020?
The unexpected loss of Clinton, the delayed victory of Bush from Gore lawsuits, and Obama’s tax and spend mandate have caused much market uncertainty and caution for the global investor. Donald Trump’s landslide win created so much global interest that investments began to pour into the U.S. before Trump was even sworn in. I call this the “Confidence Effect.”
Will the voters allow the U.S. economy to continue to move ahead? Would mid-term election losses by House Republicans cause President Trump to change his policy or course?
Remember, when President Bill Clinton ran in 1996, he moved toward the center, portraying himself as a centrist on fiscal issues, and began working with Speaker Newt Gingrich and all concerned parties to make the country more efficient. Did everyone get what they wanted? No, but it was a situation where the global investing community saw several things: leadership, fiscal restraint, and the government working for the people and business.
Because President Trump has been so successful at lowering business regulatory red-tape and taxes, the global investors and sovereign funds are staying interested in the U.S. markets.
The tax situation is also delicate. With 90% of global customers being outside of the U.S., the “smart money” is going where the taxes and governments are the most business friendly. As a result, if President Trump stays in power with congressional support, global confidence in the U.S. will continue to gain momentum.
While gold is presently priced low, real estate is reaching new heights, and stock markets are peaking. Typically, there are economic cycles which ebb and flow every 5-8 years. People are taking some profits off the table while others are jumping into the market momentum.
Cash is floating around and people are buying up assets with either stock or cash.
Now, how does this relate to the election? It is a policy and confidence issue. Each country has political leadership and policies which are analyzed individually like a NFL football team to see how they will compete on a global scale.
The smart investors will focus on investing in countries which are the most business friendly. Without business-friendly policies and leaders, there are no profits, no investors, no jobs, no innovation, and no taxes paid into the community.
Don’t forget, a big percentage of U.S. stocks are owned by offshore funds, ETFs, hedge funds and investors. America needs global investors and needs their unwavering confidence.
Overall, global investors are looking for signs and analyzing the tea leaves to see which direction this country is going. If the U.S. continues to minimize waste, taxation, corruption, and red-tape, then global investors will see value and continued growth potential in the U.S.
Whatever happens in this political debate, it is time for bold, innovative, economic leadership that has a laser focus on the American businesses and American working families who have built this nation brick by brick.
As for predictions, the Democrats statistically have many more seats to lose this year in the Senate, and therefore, Trump should keep a Republican Senate for another 2 years of about 53-57 Republicans. As for the House, the Republicans will probably hold a slim majority in the House for another 2 years also.
Since Trump is polling higher than he was on Election Day in 2016, the probability of a continued national mandate favoring his policies should be even stronger.
Global confidence in the stability and leadership of the U.S. should persist primarily because economic data are showing U.S. employment and U.S. stock markets at or near all-time record highs.
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award winning author and advisory board member to several companies around the world in education, charities, and crypto currency.
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