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End of Gridlock Webinar Slides 11-03-2016

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End of Gridlock Webinar Slides 11-03-2016

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End of Gridlock Webinar Slides 11-03-2016

  1. 1. Election 2016: End of Gridlock 03 November 2016 War Room
  2. 2. HiddenLevers War Room Open Q + A Macro Coaching Archived webinars CE Credit Idea Generation Presentation deck AccountabilityScenario Updates
  3. 3. Market Update Election Models + Forecasts Impacts of 1 Party Rule Scenario: Election 2016 Election 2016: End of Gridlock NEW
  4. 4. HiddenLevers MARKET UPDATE
  5. 5. Market Update sources: HiddenLevers, Marketwatch, FA Magazine, Financial Times, British Pound Hits New Lows DOL shout out to RIAs Saudi $100b Tech Fund / Unicorn Contractions
  6. 6. HiddenLevers ELECTION MODELS + FORECASTS
  7. 7. FORECAST: Gridlock is what we know sources: HiddenLevers Trump + GOP Congress Trump + Dem Congress Clinton + GOP Congress Clinton + Split Congress Clinton + Dem Congress Trump + Split CongressStatus Quo Obama GOP 54/46 GOP 247/188 exec senate house no longer pipe dream no longer pipe dream
  8. 8. Electoral Vote Breakdown Trump voters unlikely to vote for Democrats for Senate in swing states Result: GOP keeps House + Senate, gains Presidency, and gets Supreme Court back Trump win implies that he won swing states Clinton win does not guarantee Senate or House wins for Democrats A moderate Clinton win makes Senate control likely, but House is a steep climb End of Gridlock: How does it Happen? sources: HiddenLevers, 538.com Democrats have to gain 30 seats to control house – possible if Clinton wins by 10+% Trump Wins, GOP Sweep Clinton Landslide, Dem Sweep Trump Wins, GOP Sweep Clinton Landslide, Dem Sweep
  9. 9. FORECAST: Election Models sources: HiddenLevers , NYTimes, FiveThirtyEight, LadBrokes Election tending 2/3 toward Clinton win. Polling Forecasts LadBrokes Betting Odds Betting odds 2/3 chance that Clinton wins MXNPeso TrumpWin
  10. 10. Truman defeats Dewey / 1948 British vote to quit EU / 2016 FORECASTS: Historical Upsets sources: HiddenLevers – Brexit Chart, Business Insider Pound –25% FTSE +13% S&P –12% S&P –8%
  11. 11. HiddenLevers IMPACTS OF ONE-PARTY RULE
  12. 12. 1 PARTY: Historical Impacts sources: HiddenLevers, Wikipedia Major Accomplishments Medicare EPA, OSHA, China Open Door Minimal Minimal Tax Reform Minimal Welfare Reform Bush Tax Cuts ACA (Obamacare) Split Government does not guarantee gridlock Major changes, especially social programs, occur during 1 Party rule
  13. 13. 1 PARTY: Trump Win + GOP Congress holds on sources: HiddenLevers, DonaldJTrump.com Large-scale tax cuts, particularly for business and upper income Stated Policies Potential Impacts Reduce illegal and employment-based immigration (H1B etc) Repeal ACA Renegotiate NAFTA and other trade deals Winner: Businesses, UHNW real estate sector may get additional benefits Loser: US Economy, GDP Loser: Healthcare Sector Uncertainty hurts health stocks Loser: Multinationals, USD Trade barriers hurt US large caps, USD value tarnished Winner: US labor force (mild GDP contraction assumed)
  14. 14. 1 PARTY: Clinton Win + Dem Sweeps Congress sources: HiddenLevers, HillaryClinton.com Raise minimum wage + other pro-labor policies Stated Policies Potential Impacts Increase immigration via comprehensive reform Add public option to ACA, stricter price controls Raise taxes on high incomes and close business tax loopholes Winner: Retail sales, low-end consumption boost likely Loser: Insurers, Pharma Insurers will lose pricing power, and pharma may see price caps Loser: High-income earners, businesses with foreign earnings Loser: Domestic unskilled and semi-skilled labor force Loser: Restaurants, other labor- intensive industries Winner: US businesses, GDP
  15. 15. HiddenLevers SCENARIO: ELECTION 2016 NEW
  16. 16. NEW SECENARIO: Election 2016 source: HiddenLevers Long Term Impact Short Term Impact 3 months
  17. 17. Neutral: Clinton Small Win source: HiddenLevers Markets expect the gridlock to continue Slight bounce from FBI sell off Short-lived rally on certainty 3rd Obama term (i.e. stalemate)
  18. 18. BAD: Clinton Landslide source: HiddenLevers Outsized Clinton win gives Dems House + Senate Markets fear high taxes + pro labor policies Truman 1948 Dems swept congress ACA keeps going, pharma may be reigned in DOL fiduciary mandate sticks
  19. 19. BAD: Trump Victory source: HiddenLevers Republicans control govt + inherent uncertainty Immediate uncertainty on immigration Trump platform 2/3 GOP boilerplate ACA gets repealed
  20. 20. Scenario: Election 2016 Neutral: Clinton Small Win Bad: Clinton Landslide Bad: Trump Victory USD -5% S&P -8% USD FLAT S&P -8% USD +2% S&P +3% Markets have been expecting this outcome, and it perpetuates gridlock, so that political risk of major changes is low over the next four years. If Clinton wins with a larger- than-expected margin, Democrats could take Congress, leaving markets in fear of higher taxes and pro- labor policies. If Trump wins the election, the GOP will likely control Congress as well. Markets’ fear of protectionism and populism contribute to short-term decline.
  21. 21. End of Gridlock – Take Aways Electoral Upsets 5-10% max draw down Trump Victory immigration shutdown + protectionism End of Gridlock is real market risk, not Clinton v Trump Clinton Landslide higher taxes, pro labor policies

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