Who will win the US election?

29 May 2016

Dear Fellow Investor,

Many of you have asked me who will win the US election?  Watch the Mexico Peso and Predictit.com to get a real time view. Predictit.com is a real money site where gamblers bet on events including elections.  They are like horse race bookmakers and set the odds every day.   

Weakening of the Mexican Peso correlates to Trump’s popularity among Americans voters who want to close the door on Mexican illegal immigrants. If the Mexican Peso were strengthening, Hillary/ Sanders would be gaining as they would welcome more Mexicans, migrants, illegals  to the US ( more voters for her and her party) Trump has a different view and Predictit proves the point.

The above chart is from Gary Dorsch who produces Global Money Trends. His views are realistic and profitable for his subscribers. The cost of his service is very reasonable and I recommend it. Google Global Money Trends for information.    It is suitable for commodity, currency and stock market players. It gives the big picture.   

May has been a gloomy month for most world stock markets including Malaysia and Singapore.  Fear and uncertainty are the dominant emotions.  Developed markets in Europe and the US have suffered with the fear of higher interest rates being imposed by the US Federal Reserve.

In my opinion the US monetary authorities with their political masters in coordination with other central banks will do all in their power to prevent a world stock market collapse so a small rise in interest rates won’t matter.  A panic or collapse could undermine the power of the politicians who control the world and possibly even cause social unrest. Expect corrections not major drops. 

There is a hint of social unrest  in European countries with the migrant crises and the possibility that the UK could leave the EU.  A neo Nazi was almost elected president in Austria last week by the public who are fed up with the establishment self serving politicians, rising unemployment, influx of refugees, and shortage of housing . He lost to an anti establishment socialist by less than a few thousand votes.  

Politicians with the central banks can turn the negative mood. These banks include the Bank of China, ECB, and Japan Central Bank.  They have the tools and the will to do all it takes to prevent stock market collapse and economic disaster.   

Tools include unlimited money printing to buy government bonds  to raise debt to GDP, QE as is being practiced by the EU and negative interest rates. World growth since 1970 is based on credit growth  and there is nothing to stop the politicians from  more money printing and more credit growth.

If Donald Trump wins he might fuel a stock market/ property boom like Ronald Regan. Trump is the master of credit growth. He built his multi billion property business with credit. He will rebuild America’s crumbling infrastructure with credit.  Hillary  might do the same if  elected but now as well as Trump as Trump is a businessman not a crooked politician. 

I do not believe Trump would impose trade restriction on China/ Asia/ Europe/ and Mexico. He will not bar Muslims from traveling to America.  

He says these things to get elected but once elected, he will forget  and  it will be business as usual. He is a hard  nosed businessman  and does not want a world depression by shutting down world trade. I think the Hillary and Bernie Sanders understand that credit growth is the solution just like Obama.

Obama has  ordered banks to give housing loans to buy a house  with a 3 % down payment guaranteed by the FHA, the federal housing  agency. It is even possible to borrow the 3 % for the down payment. Could this be another housing bubble ? 

The KLSE is suffering under a cloud of uncertainty as witnessed by low trading volumes and foreign fund outflows but could see a turn in world stock markets if fiscal and monetary stimulus is employed in China, US and Europe.

Companies that we hold should benefit as they are solid.

To remove the market uncertainty for our clients , Phillip is offering an investment conference on 18 June with several distinguished speakers. It is FOC to clients.  Please clink on the link or copy and paste to your brouser below for details and registration

https://www.fame.com.my/seminar2016.aspx

Invest well and grow your wealth

Bill