The polls going into 2020 don’t look promising for Trump, nor does the electorate: 2018 mid-term elections and limited 2019 elections in the US showed that voters living in suburbs across the US are turning in droves against the Republican party of Donald J. Trump. Plus, the marginal Trump voter in 2016 and in 2020 is old and white, a demographic that is fading in relative terms as the largest generation in the US now is the maturing millennial generation of 20-40-year-olds, a far more liberal and less white demographic.
Talking to investors around the world, we’re staggered by the consensus that Trump is a shoo-in for a second term. They and the markets are in for quite a shock: voter turnout in the 2018 midterms point to heavy turnout in 2020 as well, as the younger generation is in a rebellious mood. Millennials and even the oldest of “generation Z” in the US have become intensely motivated by the injustices and inequality driven by central bank asset market pumping and fears of climate change, where President Trump is the ultimate lightning rod for rebellion as a climate change denier.
We believe that elections are lost far more than they are won. In 2016, the uninspiring, unpopular avatar of the Democratic elite establishment, Hillary Clinton, failed to motivate many on the left to even show up at the polls and lost the election to a fired-up mass of Trump voters who wanted to overturn the system. This time around, the vote on the left is thoroughly rocked by dislike of Trump – with suburban women and millennials showing up to express their revulsion for Trump. The Democrats win the popular vote by over 20 million, grow their control of the House, and even narrowly take the Senate. Healthcare is the single sector that is in for a strong headwind from a Democratic clean sweep in the election, as Medicare for all and negotiations for drug pricing bring a massive haircut to the industry’s profitability.
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.