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More Trump?


More Trump?

As the race to determine the Democratic nominee in the 2020 US presidential elections heats up, President Trump’s chances of a second term may be improving. Across the board Democratic candidates appear to be campaigning on more extreme liberal policy and rhetoric. While this provides a clear contrast to Trump’s positioning, it may ironically hand the President a win late next year.

Over the weekend a good friend and client sent an interesting chart from the Economist that I have shared below. It shows how the ideological positions of politicians in the US have changed over the last four decades. On average Republicans have become more conservative. And over the same time Democrats have become more liberal on average.

Screen Shot 2019-05-07 at 11.58.50 am

However, we see that the degree to which Democrats have become more liberal in their thinking is much greater than the additional conservatism demonstrated by Republicans. Moreover, the distribution of liberalism among Democrats has become more fragmented (a flatter curve) and shifted toward the more liberal of the group (asymmetric curve bunched down the left-hand side). This may make life difficult for Democrats.

Applying some level of strategy and game theory, the winner of the Democratic nomination will likely need to campaign behind much more diverse and extreme liberal views than in the past 40 years in order to win the support of his or her fellow Democrats. In doing so the Democratic nominee will have potentially made a rod for their own back. To then execute a winning campaign against Trump, the Democratic nominee will have to make a quick shift back to centre to appeal to the Donald’s right-leaning (though not as far leaning as left leaning Democratic voters) base.

In the end this may prove to much of a political bridge to cross. And it could well help Trump score another term as President. Like it or not.

Like it or not Trump could score another term as President. This chart shows the ideological positions of politicians in the US over the last 40 years. Republicans have become more conservative, and Democrats have become more liberal… Click To Tweet

Christopher is a Portfolio Manager for the Montaka funds and the Montgomery Global funds. He joined MGIM at establishment in 2015.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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  1. Brett Edgerton

    Hi Chris

    Thanks for sharing this.

    I wanted to share two things. Firstly, I recall reading in Rutger Bregman’s book “Utopia for Realists” that in the 60s the Republicans came very close to implementing a form of Universal Basic Income. (Too lazy to get the book and remind myself of the details, but…) Apparently the Bill was put forward to Congress, etc, and the only reason it was not passed into law is that the Democrats felt it did not go far enough… Politics being what it is, the Republicans eventually dropped it as a “stale” policy… Having personal concerns about social equity in Western Societies, and seeing the US as now representing a role-model in which I would not like to see my own country continue to follow in this regard, I find it rather surreal to consider how the world might now be had this policy been enacted! So I have no trouble in believing that Republicans have gone further to the right…

    On Trump, I made a prediction to some friends over Christmas which freaked them out – not just because it concerned them, but because they quickly realised it is actually quite plausible given the character of the man… I expect that if Trump is re-elected, within 12 to 18 months he will begin to feel out the public for support for over-turning the 22nd amendment limiting US presidents to 2 terms… I know everybody will say there’s no chance, but I don’t think anyone would suggest it is against his character to try (just one example, look at how he has brought his own family with him to Washington DC)… And China issues, especially with Xi extending his stay indefinitely, will likely be used as partial justification… In the last 3 years we’ve all learned to not think that anything is beyond the realms of possibility for this president… (Note, I do agree with him pushing back on China, and I give him a great deal of kudos for breaking through the group think surrounding their emergence as a Global power as Western elites, especially in business and politics, lined up for the short term gains from it, but I firmly believe that future US Presidents will continue what his administration has commenced)…

    Having now read this, tell me you don’t think it’s likely crossed his mind… and lingered…

    • Brett, What I will say is that there are benefits to thinking in terms of probabilities. If I were to attribute a probability of the suggestion of overturning a constitutional amendment being made AND it then passing, it would not be zero but it would be very small. If I then impose a time constraint of ‘within 18 months’, the probability would be even smaller. So small in fact as to not have to be factored into any of my decisions. Over time that probability may creep higher or lower but as it sits today, I would bet against it.

      • Brett Edgerton

        Oh I agree entirely that to the extent that it is a risk to consider it is certainly a tail risk/black swan and should not be factored into considerations, except in one specific way… the simplistic market jibber jabber that goes on daily – I stress not what anyone in Montgomery partakes in – has been saying for months that Trump wants/needs a deal with the Chinese… I see incentives to Trump in continuing to play hardball with the Chinese (and that’s certainly starting to be more recognised even this last week)… This thesis is just one potential end game to which Trump may or may not be aiming (or may potentially become his aim)…

    • Thanks for your thoughts Brett. If we can learn anything from geopolitical events over the past few years it is that discounting seemingly unlikely events to impossible is a perilous endeavour.

  2. Thanks Christopher, What exactly has he done to not deserve to get another term? What has he tried to do or done that is against the American peoples interest? I am a Trump fan but nobody seems to say exactly why he has been or is so bad for America.

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