election day +1

About the time it became clear that Florida had voted to reelect Trump, and by a more comfortable margin than is usual in the Sunshine State, both betting markets and stock index futures reversed course. Nasdaq surged; the Russell 2000 sagged in relative terms. They remained that way until Trump claimed victory and tried to bully battleground states into stopping counting ballots. That promptly sent world markets into brief decline. We’re in better shape in premarket trading, maybe because both Republicans and Democrats condemned Trump.

Where do we stand now?

–the markets have begun to factor back into prices the possibility that Trump will be reelected. This would imply continuation of his GDP-suppressing economic policies (hence the decline in the R2000), lots more unnecessary pandemic deaths and the beginning in earnest of flight of human and corporate capital from the US (hence the rise in NASDAQ multinationals). Ironically, brain drain will be limited by the unwillingness of other countries to admit possibly-infected Americans. The image of American brands abroad would continue to be tarnished by his white racism, his embrace of QAnon and his general super-unsmartness.

I suspect this mood will last at least until the presidential result is decided. If Trump ends up winning, the pro-NASDAQ/anti-R2000 trade probably has looong legs.

When I began investing in the UK in the late 1980s, the word that immediately came to mind was “quaint.” London was like Vienna writ large–a city focused on the past, half-expecting that one morning it would wake up and the nineteenth century would be back and Britain would once again the global waves. Securities analysts knew lots about palm oil, rubber gold and oil. They knew the suppliers to the Queen and the pedigree of every corporate leader. They were aware of electricity and home appliances. But they didn’t have a clue about semiconductors or computer hardware/software.

My initial reaction to the overall election results is that it underlines that the US as a country has adopted the mindset of the UK of 35 years ago.

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