Businesses that are nervous about the election

The 2016 presidential election has been a mix of comedy/horror/suspense with plenty of drama delivered via the debates. I haven’t seen many journalists mention the effects of each candidate’s inauguration on interest rates. One candidate will obviously continue the path of cheap money and bond purchasing programs, while the other is proposing to renegotiate national debt – which would create a huge headwind for treasuries that the FED is working hard to keep in a bull market. So which businesses are nervous about the election? Well I can tell you from my network of investment literate acquaintances in Texas and Florida, as well as several business owners I keep in touch with the answer is: anyone whose business is attached to consumer loans. That means everything from home remodelers, home construction and design, pool builders, the auto industry, etc. This sounds eerily similar to the 2008 collapse but with a different twist. History doesn’t repeat itself but it often rhymes. Yet as a contrarian I know the bond bull market is a bond bubble market, would you like to give me your money at a negative interest rate? I promise to return some of it to you. So the question is who is going to pop this bubble and when.

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