Home Radio Segments Steve's Market Commentary Both Trump And Sanders Could Cause A Market Crash If Elected

Both Trump And Sanders Could Cause A Market Crash If Elected

Consuelo Mack, Sanders

With Consuelo Mack, American business news journalist and host of WealthTrack

Steve welcomes back Consuelo Mack, host and Managing Editor of Wealthtrack.com, a nationally syndicated business news program airing on PBS-TV, for another thought-provoking interview.

This week the subject is Consuelo’s recent interview with Andy Laperriere, a highly-regarded Washington political analyst, who stepped outside of his normally neutral position and ventured into third rail territory to speak about the current presidential race. Laperriere has suggested that the election of either Bernie Sanders or Donald Trump could crush stocks.

To explain Laperriere’s stance, Steve uses a football metaphor by saying that while most presidential candidates fall within the 40-yard line, both Trump and Sanders operate very much outside this line, which could presage their behavior in the role of President. The full extent of executive power is rarely executed except in wartime circumstances, yet both Trump and Sanders have made campaign statements and promises that could indeed be possible without congressional approval.

Consuelo relays her conversation with Laperriere who expanded on this prospect by citing Trump’s idea to build a wall at the Mexican border and to abolish NATO and Sanders’ wanting to go after NAFTA and to break up the big banks. Any of these, if put into action, would have far-reaching and cataclysmic results in both international and domestic sectors.

Even a Clinton presidency could be impacted by the revolutionary type of rhetoric going on in the political arena right now since part of Sanders’ base and support would have to be paid attention to, as would that of Trump’s with a Republican president other than him. Both candidates have large and vocal support who certainly won’t go quietly back to their corners after election day.

Even though the market has yet to react to any of these possibilities, business and some of our global partners already have.

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

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Steve Pomeranz:  I’m happy to have back one of my favorite guests and colleagues, Consuelo Mack. Consuelo is Anchor Executive Producer and a Managing Editor of WealthTrack, watched on public TV stations all over the country. Consuelo asks the right questions to smart, thought-provoking, and engaging guests and, from time to time, I like to have our listeners get a taste of her most recent guests and topics. Consuelo, welcome back.

Consuelo Mack: Steve, it’s lovely to be back and thanks so much for that very kind introduction.  This is one of my favorite things to do too, so I’m delighted to be back on On The Money.

Steve Pomeranz: Thanks so much.  You know a recent interview caught my attention when you spoke to a normally neutral, highly-regarded expert and Washington analyst, Andy Laperriere, who wrote that should Trump or Sanders be elected, it could—as he wrote—crush stocks, and here’s the important part, even without Congress.  Does Laperriere normally take a side in presidential elections?

Consuelo Mack: He does not, Steve, that’s why it got my attention, too.  He’s been basically the number one ranked Washington policy analyst by Institutional Investor Magazine for the last 16 years.  He and his team—he’s now at a firm called Cornerstone Macro—he’s always kept on his analyst hat; he’s always been very neutral.  Typically, I’ll have him on after we know who the nominees are for who’s the Republican nominee and the Democratic nominee, and we discuss the winners and losers in business and the markets for each of the candidates.  In this case, he broke precedent and, as he said, this is the first time ever in his career that he’s actually said something as kind of provocative as that one or two candidates could crush stocks. That’s why it got my attention, and I just felt that, you know, we’re breaking precedent as well on WealthTrack by discussing this.  We don’t do politics, but it was, coming from Andy, it was such an attention getter that I felt that I really owed it to our audience to bring it to their attention.

Steve Pomeranz: You know we don’t touch the political third rail either.  We’re not interested in fostering any opinion, and we’re not going to do this on the show, but what this gentleman was saying is some food for thought that I think needs to be discussed.  He’s basically saying that normally presidential candidates are kind of within the 40-yard line of you know, using the football metaphor-

Consuelo Mack: Football analogy.

Steve Pomeranz: Yeah, football analogy. These candidates are outside of the 40-yard line and then we sit back and we think, “Well you know Congress kind of works in a stalemate, so even if we get one of these two extreme candidates as President we don’t have to worry because Congress is there to counterbalance.” His thesis was a little different.  What is that?

Consuelo Mack: It was and his point was, as you said, that traditionally that other presidential candidates and other presidents have basically not used the full executive powers that they have and that they…it’s almost like it would be on a wartime footing.  There are things that presidents can do legally that do not need the approval of Congress, that they can do and that both Donald Trump and Bernie Sanders are talking about.  I mean one of them is in trade, and, so as Andy Laperriere said, that President Sanders could hydrocodone generic online start a trade war and a President Trump could start a trade war as well.  That there are the kind of things that a President could do that doesn’t need congressional approval and that he’s concerned about existing treaties that we have.
For instance, the North American Free Trade agreement could be breached.  Andy said there’s a law, for instance, that’s called IEEPA, the International Emergency Economic Powers Act.  It was last used in 1985 by President Regan, as Andy said, when we were essentially at war with Nicaragua. He declared an emergency and essentially stopped trade with Nicaragua.  Andy was saying President Trump says, “The border problems are an emergency.  You know, build the wall, Mexico should pay for it or we’re stopping trade or I’m putting certain trade barriers in place.” The President has the authority to do that without congressional approval.

Steve Pomeranz: That is really the basic key here, that powers that can be wielded under certain extreme circumstances and laws that have already been passed to give the President those kinds of powers can be used really as an executive privilege without the approval of Congress.  We’re talking about some pretty long-tailed, let’s say, issues that have long precedents of the way presidents have acted.  I know that Bernie Sanders has, he said— and he’s stated this in his speeches—that he will identify the big banks and break them up within the first year.

Consuelo Mack: Right.  Exactly.  Needless to say, that’s gotten a lot of attention.  I also might add that we’re not just talking about this in the US and especially the trade issue to go back to that is that it’s gotten the attention of the Japanese.  I just attended a luncheon with Dan Fuss, to bring up another person who’s a legendary bond investor at Loomis Sayles.  He said, for the first time in 13 trips that he’s taken over the years to Japan, that the one thing that every meeting he’s had with both politicians and institutional investors is what the presidential candidates are saying, and they in Japan, they feel that they’re being unfairly targeted.  That they’re concerned about long-standing alliances that we’ve had, that they’ve had with the United States, that they could be upended.  When Donald Trump talks about disbanding NATO, I mean there are all sorts of things that are also being treated with considerable alarm overseas.

Steve Pomeranz: You had asked him the question as to what sectors of the marketplace.  When he said markets will crush you, are we talking about the general market?  He said no, it’s basically certain sectors.  What were those sectors, do you remember?

Consuelo Mack: One of the sectors that he mentioned was health care, which actually is going to be targeted even if Hillary Clinton becomes President.  The health care industry has a big target on it’s back and that’s one of the industries that could be hurt no matter who wins the presidency.  There’s going to be a lot more federal government intervention in another area again that a President can do, is the President already has authority, if it so designates, that is a re-importation of drugs from Canada which you might remember from a couple of years back was a big issue.  That executive power has never been used and, again, that would upend the entire American pharmaceutical industry.  No matter what you feel about it, the fact is it would have an impact, so that is one of the areas.  The other area which you mentioned on as well, Steve, was in the Bernie Sanders saying that basically under Dodd-Frank he feels that he has the executive authority to break up the big banks.  That’s another kind of revolutionary step, again seeing the government interfere in the private sector in ways that we haven’t before.

Steve Pomeranz: Well, one question you asked him is to whether he thought Sanders would get in and, forgetting what his opinion was, he said that even if Sanders was not nominated for President that there would be a melding or could be a melding of the Clinton/Sanders agenda.  Can you expand on that a little bit?

Consuelo Mack: Right. I think what his point again—this is back to his neutral analyst perspective—is that, in fact, the surprising popularity of Bernie Sanders’ agenda, which in he calls himself a Democratic Socialist, it is very much big government taking a much greater role in the economy than it has so far.  Hillary Clinton has to pay attention to that because that’s her base, and if that message is resonating with her base, then if she becomes President, obviously, she’s going to be listening to that.  That’s going to have an influence on her agenda, as well.  Again, that’s another issue that it’s a fascinating election, but there are big issues at stake because we got two candidates in each party in Bernie Sanders and Donald Trump that are saying things that, again, are way beyond what other presidents have even considered.

Steve Pomeranz: You asked him when does he think the, I mean the market’s not reacting to any of this right now,  when…

Consuelo Mack: No, and he said that.  Business is starting to react.  You might notice that we’ve had some; Jeff Immelt the CEO of GE has come out and been very critical of Bernie Sanders.  We’re starting to see business definitely respond.  The markets haven’t.  He said typically the markets, it’s after Labor Day when the markets say, “Oh hey.” You know, they realize that this election, this could really affect us.  What’s the impact going to be?  He said that’s when we’re going to start, he feels, seeing some reaction in the markets because of the uncertainty that this race is generating.

Steve Pomeranz:      My guest is, of course, Consuelo Mack from Consuelo Mack WealthTrack.  You can see the full video of that at her site.  Which is what, Consuelo?

Consuelo Mack: It’s WealthTrack.com.

Steve Pomeranz: Okay, WealthTrack.com, and you can hear this interview again as well as the transcripts at OnTheMoneyRadio.org.  Hey, Consuelo, once again, thank you so much.

Consuelo Mack: Thank you, Steve.

Steve Pomeranz: All right, that was great.

Consuelo Mack: Great.  Terrific.  Good.