So it looks like Biden is on the cusp of taking the White House. And clearly the Republicans are retaining control of the Senate, and the Democrats holding onto the House. What does this all mean for you and your money? So this election has clearly increased pre-existing divisions. Most recently, the hurried installation of a Supreme Court justice added to that divisive atmosphere that’s going on. The split government with the Republican Senate and the Democratic House and presidency pretty much means it’ll be very difficult to get anything done in either direction. And with everything that’s going on with the extremely severe recession for many sectors of the economy, COVID – some of the bigger challenges facing both the country, the planet – it’s going to be very hard to get the things done that need to be done.
And many of these things need to be “do something” regardless of if it’s the Democratic solution or the Republican solution. And therefore we’ll be left, especially from the economic perspective, with the focus on monetary policy: solutions that really have been engaged this year, but have ignored things like large scale infrastructure spending. Other fiscal solutions that really are more long-term solutions need to be kicked in at some point in the near future. That’s going to increase the distortions that already exist. You may have noticed that some of the market’s done very well. Yet if you looked under the hood, most of the markets have done very poorly. We see top-line numbers like the S&P up five, seven percent. And yet when we strip out four, five, six companies, it’s still down seven to eight, ten percent. This is essentially where the presidents, both Obama and Trump, have slowly nickel-and-dimed away the protections, the balances of power, so that they could get what they want done. Neither side has been innocent here.
That, coupled with what I like to call the rise of the city-states – where if you looked at the electoral map of not just the United States, but almost every country in the West, you get blue cities and red rural – we’re really finding ourselves in a position where the strains on the Constitution may reach a point they’ve never been ever before. I mean, division, partisanship, that’s been around since the founding fathers. But the imbalance, and the ability of the Constitution to manage that imbalance, well it’s to be determined. In fact, had there been a Trump victory, or if there is, that constitutional stress would be even greater, whether or not one likes that outcome. So it is interesting to know, where will this go? Well, is this the beginning of the end? Is the country headed for a split? And I mean, literally, secession of certain states – these things are hard to know. But what we do know is the rally right now is not because the market loves Biden, or loves a Republican Senate. It is because the only thing left in a split government is monetary injection. And that helps the markets, whether or not it helps the country. We wish you the best of investment success. Thank you.