Good afternoon,
life is a hockey game, US elections are a goon fight. In our featured article below, we examine the parameters restricting US presidential power, and what this means for the upcoming US election, and the likely limited impacts on financial markets.
But first, when NHL referee Kerry Fraser first broke into the NHL in 1973, he was considered an overbearing game-wrecker at first, in love with the sound of his own whistle. Eventually he got wisdom and learned to let the game happen better than most referees.
When conditions are right, a ref can put away his whistle. That’s when the game becomes an explosive, speeding whirl of partly restrained anger on ice. Without the disorienting sound of a whistle to interrupt its flow, natural laws take over, and a higher code of instinctive honour carries the game. Once the players know the ref is in it with them, it’s unbelievably fun to play or watch. He ignores minor breaches, the players smirk, and carry on, giggling at the freedom.
Until that code is broken.
If a player commits an obnoxious, deliberate breach, such as the below-belt “can-opener” move, and the referee ignores it, we have a problem. That code exceeds the authority of the ref, and it’s the players who try to restore it – with some sort of retaliation. This is when the game reverts to something more savage. On the other hand, if the code is breached, and the ref cauterizes the wound with an appropriate penalty (key word – appropriate), all is well.
But when the referee tries to take over the game, it’s just stupid -- like a music teacher interrupting a Rolling Stones concert to correct Mick Jaggar’s grammar.
So what do markets want, Harris or Trump? The unique aspect of US constitution is in the limits it places on government. In short, it says: “We don’t want a king,” and (imperfectly) points to higher laws. In effect, whistles are blown by committee, constantly bickered over, and thus restrained. This is how a notorious array of annoying glory-seekers can be elected, and still manage to consistently not wreck the place. Despite its numerous flaws, the world remains entirely fixated with the USA, and no financial analyst can afford to ignore it.
And if we’re wise, we’ll resist the urge to pretend to be superior to them. (Oh, hi there CBC)
Global Insight Special Report
No free rein: The realities of U.S. presidential power
An ongoing, multipart series from RBC Wealth Management is examining various aspects of the U.S. election and the investment implications.
A whirlwind of unprecedented events has upended the U.S. election, injecting even greater noise than usual into the presidential race. While the two major candidates present starkly different visions, America’s separation of powers means it’s unlikely the next president can take the country in a drastically different direction in one fell swoop.
In the second article of the series, we argue that the checks and balances built into the federal government’s structure are still relevant at a time when the country is deeply polarized.
For the first part of the series, please see the four principles investors should keep in mind about U.S. elections.
Global Insights Weekly:
Fed rate cuts on the horizon
As U.S. rate cuts near, history shows stocks and bonds have typically performed well following the start of the Federal Reserve’s easing cycles, with equities showing greater variability. Given the recent mixed economic signals, we believe investors should approach portfolio positioning with a focus on quality.
Regional developments: Canadian dollar bounces back from early August lows; U.S. government and corporate bonds respond positively to potential Fed policy pivot; UK prime minister warns of a painful upcoming budget; Chinese earnings season suggests weakening consumer spending
More here: Global Insight Weekly.
Economic Update: Business cycle / Fed easing nears / U.S. election / U.S OK / Overheating? / Geopolitics / Canadian corner: rails, economy, youth unemployment, immigration, mortgage renewals.
More here: - https://www.rbcgam.com/en/ca/article/macromemo-august-27-september-9-2024/detail?utm_medium=email
Mighty light brightens night: I caught this gorgeous shot of the Northern Lights the other night at a local lake. Enjoy!
