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What's that old cliché: if you live long enough, you’ll see everything? What was supposed to be a close US Presidential election turned out to be anything but. As it stands now, the Republicans have won the White House and the Senate. Subject to votes being counted in close races, there is a distinct possibility that could also take the House. In simple terms, this would give Republicans the ability to do pretty much whatever they want legislatively for the next two years. If they do not win the House, the Republicans will be much more limited in what they can do.

 

When I was in Washington in May hearing about what to expect for the election as well as what would follow (See my Election Update here), one of the things I heard was that if Trump won that it was going to look a lot different than his first Presidency. He has admitted he didn’t expect to win and as a result was completely unprepared for the office. This time they intend to hit the ground running and likely have many candidates for cabinet and other positions already selected.

 

I attended an investment conference in Toronto earlier this week and was surprised at how little discussion there was on the election. Most portfolio managers recognized that there were fairly major policy differences between the candidates but they seemed to be more focused on time horizons way beyond the next couple of years. However, there is no denying the fact that the markets have responded positively to the results this week. From a Canadian perspective, there are some major issues that could affect our economy and the Canadian dollar including Trump’s threat of tariffs, energy policy and trade between our two countries.

 

I will be in New York next Thursday at a conference hosted by PIMCO that will delve deep into all these issues. PIMCO is the largest fixed income manager in the world and have enormous research capabilities including having Ben Bernanke, the former US Federal Reserve Chairman on staff. We should know where control of the house is by then and it should be an incredibly interesting and informative session. I think this is an incredibly consequential election and I will report back to you as soon as I can when I get back about I learn.

 

As always, please reach out if you have any questions.