The Long View {An Introduction & Hillary Clinton}

Today we're going to introduce a new section of the blog that I'm going to call "The Long View".  In these posts we're going to briefly point out some longer term trends, themes and breakthroughs that may be drivers of the economy longer term.  The economic impact and repercussions of these longer term changes may be direct or subtle.  These trends may also not have current implications for stocks.  That is, the long view will unlikely make you money today.  But the cumulative impact of each of these will form the foundation of the new economy, for better or worse, over the coming decade.  So let's get to it.

Today we'll begin with the political observation that the probabilities have become much more likely that Hillary Clinton will be the next President of the United States.  This is not meant to be a political call, but simply a recognition of the processes that elect our President.  Those forces are rapidly coalescing around her to the point now that the odds of any of the two most likely Republican candidates, Donald Trump or Sen. Ted Cruz beating her in a general election are extremely small.  We elect Presidents via a process known as the Electoral College.  I'm assuming if you are reading this you know how that process works and I'm not going to take up the space explaining it here.  Below I've reprinted a New York Times map of the 2012 election results showing how both candidates did in the Electoral College.  President Obama handily won with 332 electoral votes over Mitt Romney.  These results are virtually identical to the 2008 race when President Obama won 365 electoral votes.  The 2012 changes were Indiana and North Carolina voted Republican which is closer to how they've historically voted in past presidential races.

It takes 270 electoral votes to become President.  For either of the two front running Republican candidates to beat Mrs. Clinton you would need some of these states that voted for President Obama to switch.  I look to the map and see only a few possibilities.  New York might vote for Trump and a Republican candidate would have an outside shot of putting Florida, Ohio and Colorado back in the GOP tent.  Currently Mrs. Clinton leads in polls in all of these battleground states.   A Republican candidate needs all of these battleground states to win assuming the GOP can hold onto all of the states its candidate won in 2012.  Florida may be a tougher win for the GOP now due to both Trump and Cruz's stands on immigration while a state like Arizona could potentially swing Democratic on this issue.

There are things that could change this analysis:

1.  Mrs. Clinton could face larger legal issues stemming from the use of a private server while she was Secretary of State.

2.  She could have an unexpected health issue.  She is I believe over 70.

3.  There could be a major stumble or scandal surrounding her campaign.  An unexpected development where she behaves poorly could cause the public to question her again.  She already has very high negative ratings in the polls.  The issue for the GOP is that their two front runners right now have worse negatives than Mrs. Clinton.

4.  The Republicans could come out of their convention having somehow nominated a moderate like John Kasich who would be more competitive in a general election campaign.

5.  Against all expectations, front runners Trump and Cruz are somehow able to pivot towards the center in a general election campaign.

Failing any of these, then Mrs. Clinton's odds of becoming President are already high and may continue to grow in the coming months.  If she wins then her Administration will likely continue many of the same policies enacted by the Obama Administration.  Wall Street may have already figured this out.  This could be one of the reasons stocks have rallied since February.  While it is always dangerous to look for cause and effect in the markets, I will point out that the current rally largely coincides with the period when Mrs. Clinton took control of the Democratic primary process over Sen. Sanders and has all but assured herself of the Democratic nomination this summer in Philadelphia.

Back Monday.