It is indeed hammer time in the city of brotherly love, now that a mess of a Republican convention has managed to inspire fear throughout blue states and most educated citizens everywhere that, incredibly, Donald J. Trump has a real chance to become the 45th president of our nation.
That said, political conventions, even lousy ones, are infamous for giving their nominees a short-lived boost. Here’s a lead paragraph from The New York Times (we know, we know) from July 1988: “In the aftermath of the Democratic National Convention, the party’s nominee, Michael S. Dukakis, has expanded his lead among registered voters over Vice President Bush, the probable Republican nominee, according to a Gallup Poll.”
What does it all mean for markets? As Chairman Mao, not exactly a market-friendly guy, might have said, “only time will tell.” As conventional wisdom has been that a Trump presidency could be catastrophic for the financial markets—the uncertainty thing, you know—the markets’ strength during the convention may have been their way of pooh-poohing Trump’s chances. On the one hand, they did the same thing leading up to the Brexit vote. On the other hand, they’ve bounced back powerfully since that vote. Now we see why one president asked for a one-handed economist.
It certainly should be interesting theater to see how Secretary Clinton defuses the hate-missiles launched toward Philadelphia from Cleveland. Few doubt that she has the intellect—many doubt that she has the deft touch. We will see. In the meantime, the convertible market still needs paper, having gobbled up a couple of issues last week and suggesting that they were at best an appetizer when a full-course meal was required. Come on, bankers, you can do this—at least after earnings season. It’s not that difficult.
(This is the cover letter for the subscription-based weekly Hillside's Hybrid Vigor newsletter. For a complete copy, please contact John Anderson at + 1 (646) 712-9289 x 107).