Super Tuesday or what may for now be known as Trump Tuesday - following Donald’s triumph yesterday across 7 of the 11 state primaries - was already unenthusiastically anticipated by markets. Florida senator Marco Rubio only managed to woo Minnesota whereas Texas senator Ted Cruz won his populous Texas home state, neighbouring Oklahoma and Alaska. Amongst the Democratic race Hillary Clinton also claimed victory in 7 of the 11 states (substituting Alaska for Colorado). Pundits now forecast around a 90% chance (up from 70%) that Mr Trump will be on the Republican ticket. This is similar to the likelihood that Hillary Clinton will lead the Democratic bid for the Office. Both conventions will take place between the 18th - 21st July. Those who, out of incredulity, have yet to seriously evaluate the viability and potential impact of Trump’s (and Clinton’s) policies are running out of reasons to postpone the unsavoury task.
It’s important to remember the vast differences in state populations – for example Texas is around 44 times more populous than Vermont; as such the number of votes Trump and Cruz received yesterday was much closer than the final outcome suggests. The hoped for Rubio regicide of Trump’s lead now seems less likely - making it less clear who, out of senators Cruz and Rubio, should stand aside to give the other a better chance at stealing the nomination from the tactless property tycoon. Still, it seems the most likely scenario is a Trump Republican nomination, encouraging a national reality check, resulting in the first female US president.
However, with over 4 months until the DNC and RNC and 8 months until the presidential election all is still to play for. For republicans a delegation of 1237 is required for the nomination, with Trump’s and Cruz’s support now standing at 285 and 161 respectively but with 1,899 still outstanding. For Democrats Clinton already has over 1,000 pledged delegates and superdelegates versus Sanders’ total of 371; 2,383 are needed to receive the nomination with 3,393 still outstanding. If events cause the backlash vote to deepen or if Clinton is somehow embroiled and Trump’s ascendance continues; one may at least find a silver/concrete lining in Mexican construction companies - who may be called upon to build 2,000 miles of egotistical wall in homage to a possible President Trump, or perhaps to keep him out.
In the meantime, the recent constancy of the US should not be taken for granted on the basis of ideals but evaluated in the context of lower growth, wider inequality and an increasingly polar democracy. Familiar risks can often be understated whereas the unorthodox can have its risk exaggerated. As we have always believed, in times of deleverage and slower growth, a net creditor position affords the flexibility to: invest sensibly, satisfy domestically and demonstrate creditworthiness. Sizeable country Net Foreign Asset (NFA) positions take time to be eroded, even under poor governance, and as such are not prone to swings in sentiment. NFA shifts can be monitored over the long term with views adjusted in advance of them reaching concerning levels. This is a reason why it remains one of Stratton Street’s preferred bases for including and screening countries for investment.