The Upheaval of 2016
by Jason Kelly
The polls and the pundits, they got it all wrong,
this year’s election that lasted so long.
Crowds cheered outsiders from the left and the right,
but the pros dismissed both crowds as just impolite.
Saying Bernie and Trump did not belong,
they flagged Hillary as their winner all along.
They loved her experience, they loved her style,
they did not care she might have to stand trial.
With friends at Goldman and a million miles flown,
she was simply “inevitable,” we heard them intone.
Her email server never bothered them a bit,
though she could not explain it, they had to admit.
Her need to hide everything from light of day,
they thought would be fine for the U.S. of A.
Her party disagreed as voters felt the Bern,
but the cronies at the top refused to learn.
They colluded and schemed to thwart the desire
of people wanting leaders they could actually admire.
Down went the Bern, up came the Hill,
away went the chance to ever fulfill
the dream of progressives for a leader to resist
every flirtation from a lobbyist.
Meanwhile, across the other side of the aisle,
an unlikely candidate rose from the pile.
They laughed at the “Drumpf,” his money and his hair.
They called him a blue-collar billionaire.
They said he shouldn’t say most things that he said.
They wanted a normal politician instead.
He ignored them to speak what people wanted to hear,
about immigration, and jobs, and the need to steer
away from globalist open-border pitchmen,
to make America great for Americans, again.
They poked fun at The Donald’s “disdain for the facts,”
never grasping the way his message attracts
voters tired of promises made but not kept
by career politicians entirely inept.
Smug in their fact-checking obsession of late,
critics missed Trump’s message in every debate.
Of Washington’s mistakes, the one that was worst,
was forgetting to care for Americans first.
When media fail and political parties look alike,
the people are left with no choice but to strike.
This year of the outsider brought two to the stump,
but Democrats killed Bernie, leaving only Trump.
Hillary dragged a list of mistakes to retry,
attracting the attention of the F.B.I.
With Bernie relegated to the political dump,
Dems nominated a person less popular than Trump.
Blame? They say it lies with a low-info crowd,
but it’s hard to find fault with what voters disallowed.
Their wants from politicians are depressingly minimal,
but do include the preference that they not be criminal.
This basic sniff test smelled bad on the left,
leaving the presidential ballot bereft
of a person the progressives could rally around
to prevent the “Orange Menace” from claiming the crown.
The only outsider candidate on voting day
was an outcast the media dismissed with “no way!”
With his Twitter account and a straight-shooting style,
Trump surged to the front in the campaign’s last mile.
When the nation looks back on this race for the ages,
they’ll call it a year when voters blew off the sages.
The “experts” said Trump was a racist, and evil,
but the unpolled masses backed his upheaval.
“No puppets on strings for us!” they said,
as the big-money donors looked on with dread.
“No pay-to-play foundations, no meaningless choice.
We’re mad as hell and we want a new voice!”
With Princeton odds for Hillary pegged at 99 percent,
defiant American voters made Donald Trump their president.
Off he goes to the White House, and let’s wish him all the best.
For the world, for the country, for the culture of the West.
To the pundits and the pollsters who did such awful jobs,
to the arrogant academics, to the tone-deaf political snobs:
Put down your cocktail glasses, leave your ivory steeple.
Take a walk down Main Street and meet American people.
Listen to the things they say, find what their lives are missing.
Come to see their point of view and stop your incessant hissing.
This republic of ours is not your toy, it’s not a game to play.
There’s a history to honor, a future to build, and debts we must repay.
Reflect on your duty to honestly report — a skill that’s been forsaken.
Perhaps next time when it’s all on the line, you won’t be so mistaken.
Look insideThe Kelly Letter
Sam Wang at Princeton Election is going to be eating a bug, after all.
He’s the poll aggregator who assigned a greater-than-99% chance of Hillary Clinton winning the presidency, who wrote at Twitter on October 19: “It is totally over. If Trump wins more than 240 electoral votes, I will eat a bug.” Bon appetit, Sam.
Donald Trump defeated Hillary Clinton to become the President Elect of The United States of America, a stunning victory for a nominee who was ridiculed by the establishment from the moment he declared his candidacy on June 16, 2015 at Trump Tower in New York City.
We as stock investors will now need to deal with a knee-jerk reaction to this surprise, but it shouldn’t last long, as I explained in last Sunday’s special Election Edition of The Kelly Letter.
I wrote that “the equivalent of Truman beating Dewey would be Trump beating Clinton. The latter is favored to win. A Trump victory would be a shock, and would likely send stocks lower in the short term.”
Indeed, here in Japan, the Nikkei 225 rolled over at 10am our time when it became clear that Hillary did not have it in the bag. The rolling over turned into a steep ramp down that left the index 5.4% lower by the close.
In New York, the S&P 500 and Nasdaq Composite futures both headed toward a 4% decline in pre-market trading.
We’re getting that short-term drop in prices that we knew was a possibility. This can be unnerving for people, particularly given the widespread wringing of hands in the media over what Trump will mean to the world, so I want to reiterate last Sunday’s message:
Therefore, rather than panic, now is a fine time to:
The signal advised a sale a month ago, ahead of the bulk of this slide, creating buying power for those already running the plan. Should the current discount persist, we’ll be able to put that capital to work in January. If not, then at least we’ll enjoy the holiday cheer of watching a market recovery.
I can already anticipate the most popular response I’ll receive to this message, which is a reply asking whether it would be wise for people already running a signal plan to put more capital into their stock fund right now.
The official answer is “no,” because the plan should be run by the book. However, it will not crater your plan if you really want to take action in this moment and buy some shares of IJR or other stock fund. The plan is resilient enough to get through whatever unfolds.
So, do whatever you want — as long as it’s not selling today. Do not do that. Buying or sitting tight are fine. Selling is not.
I am not worried about the future to any greater degree due to Trump’s victory.
The worries I had prior to the election, I still have. I don’t have new ones. I do not believe he’s apt to start a nuclear war or cause another calamity, as was suggested repeatedly during the campaign. American government includes many checks and balances. Even with a Republican majority in Congress, Trump will run an administration, not a monarchy.
To those who supported Trump, congratulations.
To those who did not, try to find comfort in knowing it’s possible for a complete outsider to violate political convention and win. The mere idea of that is refreshing, regardless of the specific candidates involved.
Don’t let the stock-market fallout get you down. It will pass. Those who buy into it or keep running their plan uninterrupted through it will thank themselves later.
Have a good rest of the week.
Subscribers, I’ll see you Sunday, as usual. See? You can still count on some things.
“Clearly what we have right now is a market that is finally realizing that this could be a repeat of what we saw in the UK in terms of Brexit — not necessarily meaning that Trump will prevail, but certainly that it will be much tighter come election day.
“That’s really the theme of the week, and that of course is coming in the form of increased volatility.”
Jakobsen believes the volatility will continue through December as investors weigh a potential Fed rate hike, regardless of who wins the White House next Tuesday. But the odds of a recession will increase sharply if the incumbent party prevails.
“It’s almost guaranteed that a Clinton victory is ‘safe’ and the Fed will move in December. And, in my opinion, that will increase the probability of a recession in the US to something like 60 to 70 percent.”
– Excerpt contributed by Jason Kelly
Z-val definition and more forecasts in The Z-val Zone.
“The market may be finally realizing that there are limits to what the Central Banks are able/willing to do to keep this gravy train going. On Friday we saw the Dow drop 394 points on the HINT that we may be coming to an end to the stimulus both here and in Europe. …
“Without the confidence that the market has in continued support from monetary stimulus, investors would have to look at the fundamentals for comfort. Unfortunately, the economic data for August did not look that good. …
“If the market were to take out the effects of the “Government Infusion Bubble”, I believe that the market would fall into a bear. …
“The longer it takes, the worse the final bear market will be, in my view. I see little reason to change my Fearless Forecast of Dow 11,500 [in 2016]. I believe it is a matter of when not if.”
— Excerpt contributed by Jason Kelly
In a cheerless missive to investors, Paul Singer at Elliott Management warned that the bond market is broken and that once central banks lose their ability to prop it up, the crash will be big. This is a recurring bearish argument, but always popular.
Singer says now is “in many ways the most peculiar period we have faced in 39 years. … Everyone is in the dark. Experience doesn’t count for much, and extreme confidence may be fatal. … the ultimate breakdown (or series of breakdowns) from this environment is likely to be surprising, sudden, intense, and large.”