Always
interesting stuff from Ben Hunt (although Bill Fleckenstein probably gets
indigestion from the basic conclusion):
“Unfortunately and unsurprisingly, the new
political leaders who emerge from a collapse of the Tower of Babel are rarely
the champions of the Forgotten Man that you might think would emerge. Both in
the 1930s and today, there’s no shortage of non-status quo political
entrepreneurs who speak the language of the politically stuck and are willing
to put themselves out into the political arena. But to be successful in their
political entrepreneurship it’s almost essential that these new candidates be
card-carrying members of the 1/10th of 1% Rich Club. Why? Because it requires
an insane amount of money and sheer notoriety to replace the machinery of a
status quo political party in a mass society. A political party is a media
company. By joining a status quo party and toeing that party line, you
communicate an enormous set of signals to potential voters for free. But by
toeing that party line, you lose your Forgotten Man authenticity and any hope
of being the champion of Something Else. Want to be a “change candidate”? Better make a couple of billion dollars
first, or have plenty of billionaire friends, so you can afford to bypass the
status quo political party.”
and
“Yes, there’s enormous
political risk associated with the collapse of status quo political
institutions and the rise of the Trumps and the Macrons of the world. But…
1) for financial
markets, these new leaders are familiar, encouraging faces. They’re members of
the 1/10th of 1% Rich Club, because they had to be to sidestep status quo
political parties. Moreover,
2) there’s going to be
a hope and a promise of fiscal policy initiatives, and that’s a tailwind for
markets, too. And finally,
3) don’t worry, Mr.
Market, when that hope and promise of pro-growth policy fades into the
realization of anti-growth gridlock, our old friends Janet and Mario will be
there to pick up the slack with more liquidity.
That’s my macro story
for the divorce of political risk from market risk, and I’m sticking to it. Where does it break down? Not with a funky German or Italian election,
but with Janet and Mario declaring victory and taking away the punchbowl. That’s
what will bring political risk back to markets.”
