My local MP, Jeremy Corbyn, won the UK Labour Party leadership election on Saturday with a 60% majority. An anti-NATO socialist, he has represented the constituency for 32 years, and has never held even a junior ministerial post. Now, he could possibly become the UK’s next Prime Minister.
His path to power depends on two developments taking place, neither of which are impossible to imagine. First, he needs to win back the 40 seats that Labour lost to the Scottish Nationalists in May. And then he has to hope the ruling Conservative Party tears itself apart during the up-coming Europe Referendum...
In the USA, the establishment candidacies of Hillary Clinton for the Democrats and Jeb Bush for the Republicans are being upstaged by the two populist candidates – Bernie Sanders and Donald Trump:
- Clinton’s campaign has stumbled badly over the email server controversy
- Sanders is polling only 8% behind Clinton, and leading her in Iowa and New Hampshire primary polls
- Bush’s campaign has fared even worse, as he is no longer seen as the front-runner
- Donald Trump has taken an early lead, with another outsider, Ben Carson polling strongly.
Meanwhile in France, polls show Marine le Pen of the National Front party with an early lead ahead of 2017′s Presidential election. Europe’s failure to act in an united way over the Syrian refugee crisis is adding to her appeal.Readers, I don't know a darn thing about UK or French politics, but I am quite sure that neither Trump nor Carson will become the GOP nominee. I have no idea who will win the GOP nomination, but the trend of presidents being former governors, senators, vice presidents and the odd 5-star general isn't going to be broken anytime soon, in my humble opinion.
Hodges' predictions are relevant to companies, he says, because of the likelihood of political change leading to political risk:
...The economic success of the BabyBoomer-led SuperCycle meant that politics as such took a back seat. People no longer needed to argue over “who got what” as there seemed to be plenty for everyone. But today, those happy days are receding into history – hence the growing arguments over inequality and relative income levels.
Companies and investors have had little experience of how such debates can impact them in recent decades. They now need to move quickly up the learning curve. Political risk is becoming a major issue, as it was before the 1990s.Of course a prediction skeptic like me would say this, but I have a very, very, very difficult time imagining that populist movements could have significant traction in the U.S. Congress in passing legislation that would seriously affect companies and investors.
UPDATE: Here's another interesting one from Paul Hodges from a couple days ago:
Oil has a higher energy value than gas, and has historically traded at around 10 times natural gas prices. So $30/barrel oil would completely erode the shale gas advantage, assuming gas prices remain around $3/MMBtu.I personally would love $30/barrel oil (I figure that would drop gas well into the $2.50/gallon range or below), but I don't see that happening either. Well, I'll set a 6 month reminder on my calendar, and we'll see who's right.