Every month, I meet a good friend for a quick lunch. We spend a few minutes catching up on each other’s families and the markets. However, we invariably end up engrossed in political discussions and debates. My friend is extremely smart, witty, and I hold him in high regard. I once asked him how he could stay so positive amidst the tumultuous state of politics in America. He laughed and said, “I love politics for the drama. It’s my daily soap opera.” Classic soap opera plot lines go something like this. Infinite love triangles, characters returning from the dead, new characters who are long lost relatives, fainting leading to pregnancy, major medical problems explaining erratic behavior, and more. Not literally what we see in Washington on a daily basis, but some plot lines are eerily similar.
Since that conversation, I’ve viewed politics as just that – a daily soap opera, with left- and right-wing politicians facing off and all the drama that comes with it. Every four years, Americans have the potential for the biggest change or the biggest drama to take center stage. This year promises not to disappoint.
I would be remiss not to mention the obvious: we are not the only ones holding an election this year. According to Time, more voters than ever before in history will head to the polls as at least 64 countries (plus the European Union), representing approximately 49% of the world’s population, are set to hold national elections. The outcomes of these elections are expected to have significant and long-lasting consequences for many nations.
Indeed, elections can bring about significant changes. The journey to this November’s election is sure to be as entertaining as any daytime soap opera. The plot unfolds with the “localist” candidate, Donald Trump, who, despite being defeated in the last election, is making a comeback from the dead. This time, he’s running his campaign as a convicted criminal. On the left, the incumbent President Biden, the “globalist”, is striving to maintain a rules-based global order run by Washington, while his mental acuity seems to be in decline. The drama is palpable!
Interestingly, “localists” had been largely on the losing side since the 1990s, but they were revived in 2016 with the Brexit vote and Donald Trump’s victory over what many considered the ultimate establishment candidate. “Globalists”, on the other hand, gained ground with the COVID-19 pandemic, the election of President Biden, and the Russia-Ukraine War. Yet, the globalists’ power bases still reside in Washington, the European Union, and to add a twist to our soap opera plot, Big Tech Companies.
Big Tech adds a twist to the soap opera narrative, having replaced legacy media in news consumption. These tech giants align with globalists, aiming to establish a world government (a rules-based order) where they control the information flow for maximum ad revenue. Surprisingly, Western governments seem to be moving against this, as evidenced by the globalists siding with the localists to limit Big Tech’s power. The EU’s actions against Apple and Google are a prime example. Is this the love triangle of our time, or is Big Tech the long-lost relative of the localist? Soap operas indeed thrive on such intricate plot lines.
Just like soap operas, politics never truly ends. This year’s elections promise a compelling narrative as democratic institutions worldwide, including the US and EU, decide between localists and globalists, with Big Tech caught in the middle. According to current polls, localists seem poised to gain further ground. However, my market interpretation suggests a different outcome.
Regardless of the power structure that emerges victorious, the common thread seems to be an inflationary outcome. Localists advocate for country-first policies, which may lead to increased protectionism and deglobalization. Globalists, on the other hand, favor the current rules-based global order and are likely to continue spending beyond their means. Interestingly, both sides seem to agree on one thing: the use of tariffs as a new weapon of choice, a trend expected to persist regardless of the election outcome. This too, is inherently inflationary.
As for the resolution of this unfolding drama, the best advice is to stay tuned and watch as the story continues to develop.
