The Coming US Presidential Election Of 2004Have you been following the US presidential election campaigns? I'll be honest, I'm not too sure that I like either candidate much which has made it tough to keep up. And yet, it is the most important thing happening on earth this year. As an investor, is there much we can learn about the future from their posturing? The two camps seem to be rather polarised on a number of issues. Firstly defence. George W Bush looks set to increase military spending very quickly whereas John Kerry will be cutting back. Could this mean that defence manufacturers might benefit or lose? I guess that the big (and small) military companies will benefit dramatically if Bush wins and weep for years if Kerry is elected. Though both want to focus on securing America, Bush plans to increase military spending by up to a third! Energy is another area. Traditional energy companies will likely benefit under Bush. Under Kerry however, it will be development firms looking to create energy efficiency that win. This could do wonders for certain tech development companies. It strikes me as just common sense to build efficiency for the future, but it isn't always common sense that prevails. What about the budget? The reports I have seen are truly amazing. Both candidates will be making strides towards lowering the budget deficit. However, the analytical reports seem to suggest that both sets of manifesto will cause the budget deficit to worsen and not improve. This can only put the US dollar under more long term pressure. It seems that the only people that can live without the need to balance a budget is big government. I'm sure most housewives could balance books more effectively! From the evidence I have seen, it seems to make little difference to stock markets as to which party wins. So I feel it would be wrong to speculate on general market direction. But as the currency markets are becoming more volatile, and with the total bill to the US taxpayers for Iraq still unknown (expect it to be huge), I would imagine that the dollar trend should be a little clearer. What has looked like a return of strength in the US dollar (over the last few months) might prove to be just a blip in a much larger and longer bear trend. Expect fireworks in 2005. What amazes me is the banality of the TV commentary of it all. Do we really care who looks the 'most presidential'? Aren't there bigger issues at stake than that? Somehow, TV networks seems to be of the opinion that what should be the big issue (Iraq and global instability) is just worthy of a mention in the 'race'. Or, is this all that the American public really cares about? And, whilst the American public owe more money individually than any other nation and the government owes more than any other has EVER, both Bush and Kerry are discussing tax cuts. I appreciate it is what they must do to be elected, but the long term harm this can only cause is waiting in the wings. * This was published in October 2004 * To read more about the US economy, please also visit:
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