Trump’s To Lose

Within days, Trump has gone from a slight lead in the polls to seeming collapse. We think the market never expected him to win, but now it has written him off entirely. It’s just like Brexit – an anti-establishment movement given no chance of victory, and warned against by the establishment as a catastrophe. So Brexit happened, markets had to undergo a major correction. Our election model says Trump should win. He has on his side the reliable only-two-terms pattern that can only be overcome by a very strong economy, and yet the economy is weak. This demonization phase was entirely expected. Trump’s optimal strategic position is, ironically, just like Obama’s, who enjoyed the same advantages: “hope and change.” He has made a terrible mistake by emphasizing fear instead. There is still plenty of time for him to come back. If he does, and if he wins, it will shock markets just as Brexit did – and will be a buying opportunity.