If she wins..., If he wins.../Have you seen silver?/FITB talks private credit competition

I get asked just about every day, and ahead of each election, by our financial advisors and clients whether we will alter our investment strategy depending on who wins the election. The answer is always no as I’ve learned over my 30 years in this business that investing based on your politics is never a good idea.

Could there be outlier situations based on specific policies, sure, but overall we won’t change one thing. And I don't pay attention to the Wall Street sellside lists that go around on which stocks to buy or sell depending on the outcome. 

That said, I still need to have thoughts and opinions on how things might play out and as a bleeding heart free market believer I have plenty of criticism with both candidates policies but do my best to focus on exactly what will directly impact economic activity and earnings and try to be as objective as possible. I never thought though I'd have to look to Argentina and Javier Milei in search of the goal of free markets and away from two candidates in the US preaching protectionism and industrial policy. 

I’ve stated many times since 2017, I have a big problem with tariff wars and while Trump raised the use and profile to a new level back then and wants to continue on if elected, Biden did nothing to reverse it and in fact added to them. I get the economic belief and theories that there is no such thing as truly free trade and tariffs are an effective tool to even the playing field. But, I’d prefer we do our best to make American companies the most competitive they can be via low corporate taxes and light handed regulatory burdens. Also, I don’t believe that those who believe in the stick of tariffs fully analyze the hidden damage it does throughout the economic chain and the retaliatory impact of those applied to us. Also, it is American companies that physically pay the tariffs and then we hope and pray that they somehow benefit on the back end via higher prices or something else.

I needed this weekend to search YouTube for Milton Friedman videos talking about tariffs to keep my mind sane on this and the unintended consequences and this was the best one.

Let’s remind ourselves that the US manufacturing index within industrial production is still below its 2018 peak when the tariff battle reached its apex.

To the point about lowering the costs of doing business, if Trump wins, at best I believe the corporate tax rate will likely stay the same notwithstanding his comments to lower them further (although even lower is better than tariffs). So no change likely here to earnings and capital investments. The Harris proposal to raise the rate to 28% which would make US business less competitive makes little sense.