Brexit Bump Bodes Well for the Trump Train We Don’t Need Them:
Elitist Narrative Comes Crashing Down Commentary By Fergus Hodgson
Gold Newsletter’s Roving Editor Dear John, The fear mongering that preceded the Brexit vote suggested long-term depression for the United Kingdom upon approval, but what happened? As reported by CNN Money, the London Stock Exchange has been on its “longest winning streak in history,” up 33 percent since last February. Meanwhile, unemployment fell a point to 4.8 percent in the last half of 2016 — compared to 9.8 percent for nations in the Eurozone — and the latest annual inflation is 1.1 percent.
With an independent, self-governing United Kingdom in sight, even business confidence is at its highest level in 18 months. This comes on the back of higher consumer spending and “unexpectedly positive economic performance,” writes Tim Wallace of the Daily Telegraph. A guest on a recent edition of the Gold Newsletter Podcast, Yaël Ossowski, stated that “people still do believe in the pound; they still do believe in the way that British institutions work.…The United Kingdom, she is free, she is strong, and she shall persevere” — despite whatever the BBC and sheltered elitists might want you to believe. The real losers from Brexit are, in fact, the EU states that remain. The bookies give 88.5 percent confidence that UK separation will proceed in the first half of 2017, and the European Union will lose its most sane, market-oriented member. The British were the greatest impediment to the centralization of political power and cartelization of markets in Brussels.
The eurocrats are not learning from the departure nor mending their ways, and are determined to see the United Kingdom worse off — lest the British entice other member states to defy the EU dream and forge their own paths. However, the gyrations of incensed politicos and their functionaries are incidental to the most important lesson for us on the American side of the Atlantic.
We have heard the same sky-is-falling warnings about populism and the presidency of Donald Trump. The political class in Washington, DC couldn’t fathom the thought that someone who was uncouth and not one of their own might lead the nation. The progressives and their RINO partners in crime didn’t want the peasants to realize that they could do without their overlords. But the cat is out of the bag. Seven months have passed since the populist revolution prevailed in the United Kingdom, and everyone can see that the sky has not fallen. Unlike bread-and-circus populism elsewhere in the world, the Brexit and Trump campaigns have a common thread: decentralization — a rejection of the political class in favor of decision making in the hands of or closer to constituents.
These are not purist movements, to be sure, and Trump has taken a beating from experienced free-market advocates. At the 2016 New Orleans Investment Conference, for example, both Charles Krauthammer and P.J. O’Rourke expressed grave misgivings, and Krauthammer ruled out voting for the real-estate magnate.
Steve Moore was also a panelist in New Orleans, and he warned people: “Don’t bet against America.” He was right, and he didn’t get egg on his face like Paul Krugman. The Nobel Laureate said the U.S. stock market would never recover from Trump’s electoral victory…only for the Dow Jones Industrial Average to reach an all-time high that same day, and in the following six weeks beat all post-election rises since 1900.
Now in office, Trump is initiating what appears to be the most aggressive, pro-business strategy at least since Ronald Reagan. He has already placed a freeze on federal hiring and regulations, and so long as he continues in this direction, the United States will indeed win under his watch.
Not only is the new normal of low growth set to be the old normal, gains from trade beckon. Break out the Pimms, because UK Prime Minister Theresa May visited with Trump and has already initiated immediate high-level talks to negotiate a post-Brexit trade deal.
Astute observers will have noticed that the U.S. dollar has appreciated substantially, particularly against the Mexican peso. Renewed trade alliances with the British Commonwealth and the likely deregulation of the banking sector will strengthen the dollar's reserve-currency position even further.
The bottom line is that the Trump presidency makes domestic investment and dollar-denominated assets more attractive than they were previously. That is not to say Trump can undo what has already been done, in particular the ominous debt load of unfunded liabilities. However, he is dead set on lowering corporate taxes and repatriating capital — not to mention approvals for major energy and industrial projects at home. That makes companies with cash stashed abroad and energy infrastructure particularly enticing. David Einhorn of Greenlight Capital has weighed in and added that corporate "full federal taxpayers with healthy profits" stand to gain heavily.
Of course, Einhorn is also bullish on gold, and Trump is a primary reason why: “Our sense is that Mr. Trump doesn’t hold any core policy beliefs and is apt to change his mind as he sees fit,” Einhorn recently wrote. “This will lead to more political and economic uncertainty and less stability.”
It’s ironic that gold — the ultimate anti-elitist investment — can also serve as a safeguard against the man who’s running roughshod over the elitist establishment. |
