BUSINESS IS READY FOR TRUMP ROLLERCOASTER

JUST JIM 233.

BUSINESS READY FOR TRUMP ROLLERCOASTER.

When the Trump presidency starts next Friday, the business community won’t be alone in wondering what happens next.

During the transition from President Obama to President Trump, economic indicators have generally been up on both sides of the Atlantic. Here the FTSE 100 has had its longest run of successive all-time peaks since it was set up in 1984. One of the reasons is Donald Trump’s commitment to increase infrastructure spending across the United States. Any business traveller will know The Donald is on to something here. Most of America’s airports are tired compared to their gleaming counterparts in Asia and the Middle East. It is the same with US roads and rail. It is the penalty Americans are paying for being first to embrace the car revolution in the post war years.

SME confidence is also strong in the UK. It rose from 2.9 to 8.5 in the last quarter according to the Federation of Small Business. Is this a spill over effect from Trump’s plans when he comes into office? Some economists believe that for every percentage point the US economy grows, advanced economies like the UK grow by 0.8%. The incoming President is planning tax cuts and increased defence spending as well as major infrastructure schemes that we have already discussed.

But business needs to be cautious. Trump is a loose cannon. We have already seen shares in pharmaceuticals crash as a result of the incoming President’s determination to repatriate manufacturing to the US. Bringing jobs home was a key election platform and has already led to Ford deciding to locate a car plant in Michigan instead of Mexico. Defence shares have also been hit by tweets sent out from Trump Tower.

Business will also be aware that the new President will be taking office with controversy swirling around his coiffured blonde hair. Has he done enough to distance himself from his global private interests? Is the team he has selected to run the great offices of state up to the job? Will he get the support of the Republican controlled Senate and House that the raw numbers suggest? Many don’t regard him as a real Republican. Then there is the personal stuff. Is he in thrall to the Russians over his peccadillos, and will he realise that he cannot run the United States by angry tweet.

Business on both sides of the pond have craved more business experience at the top of politics. Well the USA has got one and it will be fascinating to see if Trump can manage a political machine as well as he ran his boardroom. They are very different beasts.

 

Follow me at www.jimhancock.co.uk

 

AFTER SANDY,WHO NEEDS ROMNEY?

 

This blog is about the American election, but before I get started here’s a reflection on the media coverage of Frankenstorm Sandy.

Somehow I must have missed the wall to wall coverage as the storm hit Haiti before moving north to the USA. I don’t remember the TV correspondent’s previews of the disaster about to hit this desperately poor country days in advance. I don’t remember the sight of reporters clinging on to trees as they reported from Port-au-Prince and I don’t remember interviews with Haitians in the aftermath of the storm.

I appreciate millions more people were affected as the storm raked America’s East Coast but does coverage of these disasters have to be so brazenly dictated by the abundance of news crews in New York and their sparcity in Port-au-Prince?

One blessing of Storm Sandy was a temporary lull in the campaign for the US Presidency. It is now back in full swing ahead of Tuesday’s poll as President Obama and challenger Mitt Romney spend the last of the 2bn dollars that they’ve raised for their campaigns.

Does it all matter for business in the North West of little ol’ England? The answer has to be yes because of the huge American economy. Whoever is pulling the economic strings in Washington will have some effect on our efforts to pull out of recession. America’s domination of the world is diminishing in the face of China, India and Brazil but it is still the daddy.

It also matters because American foreign policy decisions could have a profound effect on all our futures. I only need to refer to a possible clash between Iran and Israel to make that point.

The economy is crucial and that should worry Obama in these closing days of the campaign. Jimmy Carter in 1980 and George Bush Snr in 1992 became one term presidents during periods of economic stress. According to recent research 28% of American workers are worried they might lose their job. 48% of homeowners believe their home is worth less than the mortgage.

So has all the hope and zeal that surrounded the election of America’s first black President four years ago vanished? Will Obama suffer the fate of other western leaders who have lost office since the recession began like Berlusconi in Italy and Sarkozy in France?

Possibly not because Mitt Romney has not sealed the deal with many floating voters. His Mormon faith, his opposition to the bail out of the US car industry and the fact that many Republicans are dissatisfied with him as their candidate all mean that victory may elude him.

The main question is what is the right direction for America? President Obama has staked all on his massive reform of America’s health care system and a $768bn package of tax cuts and investment in the economy. Romney would scrap “Obamacare” as he scathingly refers to it and reduce Federal spending.

Romney faces an uphill task because even if more people vote for him in total across America, you have to win 270 votes in the Electoral College to win. Al Gore got most votes in 2000 but George Bush won in the College. The College is made up of state representatives who formally cast their votes in December reflecting the way people voted in their state. California has 33 votes, sparsely populated Montana just 3.

So although the national polls are showing Obama and Romney dead level, the election will be won and lost in a few key states.

Without a further big push by Romney it looks as if the President will get to 271 votes from 21 states, crucially including Ohio. Romney would win 206 votes from 23 states if he takes the key state of North Carolina. To win Romney would have to take three or four of the swing states of Colorado, Florida, Nevada, New Hampshire and Virginia. It’s a big ask.
It’s going to be close. Let’s hope it doesn’t all hang on a chad.