Peace And Prosperity
It is generally accepted that investment managers should not talk about politics. Especially in today’s highly polarized world, one tries to stay clear of controversial statements. But, let us be frank, US presidential elections have huge global ramifications. The most important one being war and peace.
It is now very likely that former President Trump will get a second—delayed—term. Overseas stocks should greatly benefit from this. Why? Because he has a track record of bringing peace to the world. Everybody benefits from peace and President Trump has an impressive track record when it comes to making peace.
Let’s go around the world. After a year marked by harsh rhetoric between the newly elected president and the Great Leader of the Hermit Kingdom, tensions between the United States and North Korea dropped dramatically. The speedy deescalation even resulted in a US president setting foot in the Democratic People's Republic of Korea for the first time in history.
The ISIS “caliphate” occupying parts of Iraq and Syria was swept away into the dustbin of history shortly after Trump came into power. Iran was reduced to a bankrupt and marginal power no longer in a position to finance Hezbollah, Hamas and the Houthis. Israel and several Arab countries signed the Abraham accords. Peace in the Middle East finally seemed to be a possibility.
In 2008, Russian despot Putin invaded the South Ossetia and Abkhazia provinces of Georgia before President Bush convinced him to go no further. Then, under Obama, Putin stealthily occupied Crimea and the eastern part of Ukraine. During Trump's first term he did not take an inch more. Putin resumed attacks once the latter left office, with devastating consequences for Europe.
For twenty years, US troops were regularly killed in Afghanistan as we didn’t seem to find a way to untangle ourselves from a war gone awry. Yet, in the final 18 months of the Trump administration, no American casualties were reported even as we were dramatically reducing our footprint. Today, the Taliban is back in charge. Afghanistan has returned to the Middle Ages and has most likely become, again, a base for international terrorism.
Most important of all, there was no overt tension in the Strait of Taiwan. President Trump, rarely self-effacing, also brags about having prevented other wars between unnamed hostile countries.
All this suggest one can realistically expect peace again under a new Trump administration. An end to the Ukrainian and the Middle Eastern wars would have huge repercussions on the world economy and the European economy in particular.
Energy prices would drop dramatically, benefitting European and Japanese economies disproportionally. Europe would furthermore benefit from the reconstruction of Ukraine and even, down the road, from restoring economic relations with the Russian Bear. Putin is not immortal. In Asia, reduced tensions on the Korean peninsula and a potential rapprochement with China would greatly benefit Japanese companies.
Sorry, but politics do matter sometimes. Europe and Japan will benefit disproportionately from a new peace dividend.
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The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties, and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Past performance is no guarantee of future results. Investing involves risk; principal loss is possible.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.