Democratic National Convention 2016 Donor039s Names Released (CMCSA, FB) The polarized and tense political atmosphere is definitely driving donations to the Democratic party. On September 26, the Philadelphia 2016 Host Committee, or the organizers of the Democratic National Convention this cycle, filed a report with the Federal Election Commission that lists the donations it received. The committee collected 85 million in donations - 18 million more than the Republicans and almost 20 million more than the amount it raised in 2012. In 2011, ex-DNC Chairwoman Debbie Wasserman Schultz had pledged that the party would fund the 2012 convention by relying solely on individual donations, and not accept funds from lobbyists, corporations and political action committees (PAC). That promise was quickly taken back in 2012 and corporations donated millions in cash. This year is no different. Pennsylvania was the biggest donor overall with its 10 million contribution. The city of Philadelphia gave 8 million. Comcast Corporation (CMCSA ) was the committees biggest corporate donor this year. It donated 5.6 million in cash and in-kind donations, including telecommunications hardware, construction, advertising and personnel. A few companies have donated the exact same amount to both the Republican and Democratic convention committees. These include Bank of America, Xerox, Twitter, Google, and Samsung. (See also, Republican National Convention 2016 Donors Names Released ) Here are a few noteworthy corporate donors: Morgan Stanley - 75,000 Super PAC Priorities USA, which has raised more than 133 million from Clinton supporters, contributed 1.5 million towards convention expenses. Individuals who had given to the super PAC have put forward some cash for the convention as well. SlimFast founder S. Daniel Abraham gave 350,000 and venture capitalist J. B. Pritzker gave 1.2 million. The oil and gas industry was represented by trade association American Petroleum Institute (700,000) and PECO Energy company (1.7 million). In contrast, API gave the Republican convention 1 million this cycle. The Democratic party also received significant support from labor unions. Amongst the donors were the International Union of Bricklayers and Allied Craftworkers (1.3 million), the Laborers International Union (250,000), the United Association of Plumbers and Pipefitters (800,000), the United Automobile Workers (100,000), the United Food Commercial Workers (255,000), and the United Steelworkers of America (50,000).wiki How to Trade Forex Part One of Three: Learning Forex Trading Basics Edit Understand basic forex terminology. The type of currency you are spending, or getting rid of, is the base currency. The currency that you are purchasing is called quote currency. In forex trading, you sell one currency to purchase another. The exchange rate tells you how much you have to spend in quote currency to purchase base currency. A long position means that you want to buy the base currency and sell the quote currency. In our example above, you would want to sell U. S. dollars to purchase British pounds. A short position means that you want to buy quote currency and sell base currency. In other words, you would sell British pounds and purchase U. S. dollars. The bid price is the price at which your broker is willing to buy base currency in exchange for quote currency. The bid is the best price at which you are willing to sell your quote currency on the market. The ask price, or the offer price, is the price at which your broker will sell base currency in exchange for quote currency. The ask price is the best available price at which you are willing to buy from the market. A spread is the difference between the bid price and the ask price. 1 Read a forex quote. Youll see two numbers on a forex quote: the bid price on the left and the ask price on the right. Decide what currency you want to buy and sell. Make predictions about the economy. If you believe that the U. S. economy will continue to weaken, which is bad for the U. S. dollar, then you probably want to sell dollars in exchange for a currency from a country where the economy is strong. Look at a countrys trading position. If a country has many goods that are in demand, then the country will likely export many goods to make money. This trading advantage will boost the countrys economy, thus boosting the value of its currency. Consider politics. If a country is having an election, then the countrys currency will appreciate if the winner of the election has a fiscally responsible agenda. Also, if the government of a country loosens regulations for economic growth, the currency is likely to increase in value. Read economic reports. Reports on a countrys GDP, for instance, or reports about other economic factors like employment and inflation, will have an effect on the value of the countrys currency. 2 Learn how to calculate profits. A pip measures the change in value between two currencies. Usually, one pip equals 0.0001 of a change in value. For example, if your EURUSD trade moves from 1.546 to 1.547, your currency value has increased by ten pips. Multiply the number of pips that your account has changed by the exchange rate. This calculation will tell you how much your account has increased or decreased in value. 3 Part Two of Three: Opening an Online Forex Brokerage Account Edit Research different brokerages. Take these factors into consideration when choosing your brokerage: Look for someone who has been in the industry for ten years or more. Experience indicates that the company knows what its doing and knows how to take care of clients. Check to see that the brokerage is regulated by a major oversight body. If your broker voluntarily submits to government oversight, then you can feel reassured about your brokers honesty and transparency. Some oversight bodies include: United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC) United Kingdom: Financial Conduct Authority (FCA) Australia: Australian Securities and Investment Commission (ASIC) Switzerland: Swiss Federal Banking Commission (SFBC) Germany: Bundesanstalt fr Finanzdienstleistungsaufsicht (BaFIN) France: Autorit des Marchs Financiers (AMF) See how many products the broker offers. If the broker also trades securities and commodities, for instance, then you know that the broker has a bigger client base and a wider business reach. Read reviews but be careful. Sometimes unscrupulous brokers will go into review sites and write reviews to boost their own reputations. Reviews can give you a flavor for a broker, but you should always take them with a grain of salt. Visit the brokers website. It should look professional, and links should be active. If the website says something like Coming Soon or otherwise looks unprofessional, then steer clear of that broker. Check on transaction costs for each trade. You should also check to see how much your bank will charge to wire money into your forex account. Focus on the essentials. You need good customer support, easy transactions and transparency. You should also gravitate toward brokers who have a good reputation. 4 Request information about opening an account. You can open a personal account or you can choose a managed account. With a personal account, you can execute your own trades. With a managed account, your broker will execute trades for you. Fill out the appropriate paperwork. You can ask for the paperwork by mail or download it, usually in the form of a PDF file. Make sure to check the costs of transferring cash from your bank account into your brokerage account. The fees will cut into your profits. Activate your account. Usually the broker will send you an email containing a link to activate your account. Click the link and follow the instructions to get started with trading. 5 Part Three of Three: Starting Trading Edit Analyze the market. You can try several different methods: Technical analysis: Technical analysis involves reviewing charts or historical data to predict how the currency will move based on past events. You can usually obtain charts from your broker or use a popular platform like Metatrader 4. Fundamental analysis: This type of analysis involves looking at a countrys economic fundamentals and using this information to influence your trading decisions. Sentiment analysis: This kind of analysis is largely subjective. Essentially you try to analyze the mood of the market to figure out if its bearish or bullish. While you cant always put your finger on market sentiment, you can often make a good guess that can influence your trades. 6 Determine your margin. Depending on your brokers policies, you can invest a little bit of money but still make big trades. For example, if you want to trade 100,000 units at a margin of one percent, your broker will require you to put 1,000 cash in an account as security. Your gains and losses will either add to the account or deduct from its value. For this reason, a good general rule is to invest only two percent of your cash in a particular currency pair. Place your order. You can place different kinds of orders: Market orders: With a market order, you instruct your broker to execute your buysell at the current market rate. Limit orders: These orders instruct your broker to execute a trade at a specific price. For instance, you can buy currency when it reaches a certain price or sell currency if it lowers to a particular price. Stop orders: A stop order is a choice to buy currency above the current market price (in anticipation that its value will increase) or to sell currency below the current market price to cut your losses. 7 Watch your profit and loss. Above all, dont get emotional. The forex market is volatile, and you will see a lot of ups and downs. What matters is to continue doing your research and sticking with your strategy. Eventually you will see profits. Try to focus on using only about 2 of your total cash. For example, if you decide to invest 1000, try to use only 20 to invest in a currency pair. The prices in Forex are extremely volatile, and you want to make sure you have enough money to cover the down side. Start trading forex with a demo account before you invest real capital. That way you can get a feel for the process and decide if trading forex is for you. When youre consistently making good trades on demo, then you can go live with a real forex account. Limit your losses. Lets say that you invested 20 in EURUSD, and today your total losses are 5. You wouldnt have lost money. It is important to use only about 2 of your funds per trade, combining the stop-loss order with that 2. Having enough capital to cover the downside will allow you to keep your position open and see profits. Remember that losses arent losses unless your position is closed. If your position is still open, your losses will only count if you choose to close the order and take the losses. If your currency pair goes against you, and you dont have enough money to cover the duration, you will automatically be canceled out of your order. Make sure you dont make this mistake. How to Create a Currency Converter With Microsoft Excel How to Buy Stocks How to Read Forex Charts How to Get Rich How to Understand Binary Options How to Invest Small Amounts of Money Wisely How to Make Lots of Money in Online Stock Trading How to Calculate Bond Value How to Calculate Dividends Reader Success Stories All the information in this article boosted my understanding of Forex trading, which Im about to start. It made me focus on the important parts I wasnt aware of. Thank you.. more - Joseph Stephen You can profit from trading Forex properly, but if you dont know about this, you can have losses. Practice fundamental and technical analysis. Thanks. Sharing these tips.. more - Zahirul Islam This article was useful for me. I havent begun trading, but I have a demo account and now I know the terminology and understand a little more.. more - Andile Biyela Excellent explanation of Foreign Exchange, what it is and how it operates. 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Helpful to have it in points. - Chanu Salda This is going to help me a lot. Thank you so much. - Imran Bashir It made me understand forex better than before. - Phasika Mahlangu Its very informative and easy to understand. - Thembi Nikani The info was great. It was really useful. - Ebe L. The note on avoiding scams is so helpful. - Daniel Mwangi This is good article to learn from. - Enos Masinga Nice amount of information given. - Tyrone Hill Its really helpful. Thanks. - Dane LuaForex Blog 2016 Presidential Candidates and the US Dollar February 19, 2016 by Barbara Rockefeller International investors are biding their time on evaluating the outcome of the next US presidential election as the field of candidates gets winnowed down. The US presidential election process historically has no discernible effect on financial conditions. Financial players are sophisticated enough to know that campaign promises are not likely to become real-world actions. Newly elected presidents hardly ever achieve their campaign promises, and certainly not in the first 100 days, which is the medium-term for most investors (and long-term for traders). We wonder if this time it might be different and financial markets will start responding to the US voters choice of president. Investors might fly off the handle at a perceived threat to the status quo. This is exactly what to expect if the extreme stance on certain issues, especially taxes and national security (i. e. war) start looking credible. Extreme stances may cause a rise in the risk premium demanded to keep global investors in the market for US assets, both stocks and bonds, and thus the dollar as well. Overall, the US economic and financial system is both stable and resilient. It would take a major change in the systems infrastructure to have a big or lasting effect on financial markets. Most of the big changes being touted by candidates today are silly or impractical, but a few come close enough to the bone to pose a genuine threat. The election will be held in November. The Republican convention that chooses the partys presidential candidate will take place July 18821121 in Cleveland. The Democratic convention will be held a few days later, July 25821128, in Philadelphia. As of February, Donald Trump is the most likely to become the Republican candidate and Hillary Clinton the most likely to become the Democratic Party candidate. Of the two, Trump has the most extreme proposals, while Clinton represents a continuation of President Obamas policy stances Before looking at specific threats to the US financial system, its important to note what everyone already knows but all too often fails to keep uppermost in mindpoliticians lie. Clinton comes under intense scrutiny so that disclosure of the smallest fib leads to a judgment of untrustworthy in polls. Trump tells more lies than any politician anyone can remember, including that his heritage is Swedish rather than German and that he saw Muslims celebrating the fall of the World Trade Center on 911both utter falsehoods. Trump said 81 of murdered whites are murdered by blacks (when 84 of murdered whites are murdered by whites). He also said the unemployment rate is not 4.9, its more like 28821129 or even 35 or (he claims to have heard) 42. Numbers that high may refer to total people not working, like children and the retired, but hardly to the working-age population available for work. Trumps lies and buffoonish behavior seem not to disqualify him in the eyes of disgruntled voters, at least so far. But tolerance of lies and braggadocio may not outlast the nomination process. That means we must not ignore the lesser candidates, many of whom pose threats more chilling than Trumps lack of dignity and presidential demeanor. Government Shutdown The biggest threat to US financial asset stability is Republican candidate Ted Cruz. who led Congress to push the entire US government into shutdown in October 1821116, 2013 and threatened to do it again in November 2014. Before then, the last time the US government was shut down was 1995821196 during the Clinton administration. In both instances, the ostensible reason was the demand that deficit spending be slashed. The real reasons are more complicated and have more to do with Congress exercising power over the President and the power of individual Congressmen over the rest of Congress as well as over the President. Because past government shutdowns were relatively brief, financial market players tend to see them as a nuisance rather than a crisis. During the 1995821196 episode, the dollar did not fall, nor did the S038P 500 stock index. In fact, they both went up, as you can see on the chart below. The 10-year note, already in a yield downtrend, showed no panic. Reuters reports the yield index at 5.935 on Nov 14, 1995 and 5.673 on January 8, 1996. The same thing happened in 2013. For this reason, financial market analysts dont take US government shutdowns very seriously. US Dollar Index (Black) and S038P 500 Index (Red) during 1995821196 US Government Shutdown (two sessions defined with blue vertical lines). Source: Reuters. But it would be a different kettle of fish if it were the President and not Congress refusing to sign a budget and thus shutting down the government. Global markets might well respond badly to President Cruz exercising executive power in this manner. It would look like dictatorial fascism. Confidence in the US and American assets would suffer. At this point in time, however mid-February 2016candidate Cruz is losing popularity and not likely to become the Republican choice. National Security The term national security is a proxy for ramped up military spending and saber-rattling. if not outright military excursions. Aside from the libertarian candidate Rand Paul. who has pulled out of the race, every Republican candidate has promised a major military initiative in the Middle East to beat ISIS into the ground. We should note that once a contender becomes the selected official candidate, he is favored with briefings from the military establishmentand the candidate changes his tune, or at least the tune becomes more nuanced. Over-the-top. macho militarism is a long-standing feature of the Republican political play-book but we set it aside at our peril. Its likely that candidate Jeb Bush is failing to gain traction in polls and in the primaries in part because he chooses to employ the same foreign affairs advisors that his brother George W. Bush used to get the US into the Iraq war. Its of no little interest that leading candidate Trump opposed the Iraq war and asserts the US must not only win any war, but also win the peace. He says if the US cant do both, it needs to stay out. This contradicts his other statements about bombing the Iraqi oilfields (and any civilians who happen to be around) to defeat ISIS. Trump has also said mutually exclusive things about taking on Russian leader Putin. In December 2015, Putin praised Trump. a strange event. Nobody can remember a world leader praising a presidential candidate. Its likely that because both men are raging narcissists, they actually do understand one another. If we accept the view that Putins overriding goal is to restore the grandeur and power of the now-failed RussianSoviet empire, if not its geographical reach, we must admit this is something Trump can easily understand and perhaps accommodate. In other words, Trump can appreciate that Putin wants to make Russia great again just as Trump seeks to make America great again. That might be fine with Trump as long as Putin doesnt step on American toes. We can even imagine an informal alliance of the US and Russia on some matters of mutual interest, including Syria and relations with Chinanot to mention North Korea and perhaps Afghanistan. This is one of the reasons the neo-conservatives. who instigated and supported the Iraq war, would like another one, and are trying to keep the Cold War goingoppose Trump. Likely Democratic candidate Clinton is less militaristic than the Republicans generally. Having been Secretary of State under President Obama, Clinton is already fully briefed on what the US can realistically hope to achieve. Clinton has not proposed any major changes in the military budget or mix of military and non-military spending. That is a task taken by Senator Bernie Sanders. who voted against the Iraq war and would like to see more diplomacy and less military action. Sanders proposes cutting the defense budget, although he has not named a specific amount, on the grounds that former President Eisenhowers worry about the military-industrial complex in 1953 has indeed come truemost military spending goes to private contractors. And much of the spending is wasteful and misdirected to out-of-date Cold War weapons systems, including nuclear submarinesnot to mention instances of fraud. If Sanders gets the Democratic Party nomination, the immediate effect would be a sell-off in defense industry stocks. If Trump becomes the Republican Party candidate, we might expect he would try to fulfill the campaign promise of driving ISIS back into the ground. A US military incursion in the Middle East would be good for the stock market and oddly, the dollar. The dollar rose strongly upon declarations of both the first and second Iraq wars. Nobody knows why. FX traders are not any more blood-thirsty than any other traders, but its a historical fact that the dollar rises when the US rattles the sword. Budget Re-Structuring Except for 1969 and four years around 2000, the US federal budget has been in deficit since 1965. In fiscal 2015, the deficit contracted to 439 billion, the lowest level since 2008, on cost-cutting and economic recovery that boosted tax receipts. The US has two budget problemsthe composition of the deficit and the cumulative debt burden. Both aspects of the US budget reflect an issue that no other G7 or G20 country facesthe cost of military spending. The US spends more on military spending than the next ten countries combined. Politicians and voters alike are confused on the subject of the US as world leader. Critics say the US has no business appointing itself the leader of the free world, and yet they expect the US to rush to the rescue when their own self-interest is threatened. President George W. Bush demanded contributions to the Iraqi war effort from regional governments, at first, and President Obama deferred to German Chancellor Merkel when Russia threatened Ukraine. But on the whole, the US either chooses or is forced by circumstances and peer pressure to play the leading role in international affairs when a military response may come into play. It goes without saying that the prosperity of many European countries, as well as South Korea and Japan, depends on not having to spend tax money on defense. For their part, American citizens are proud of military prowess and world leadership and yet, at the same time, are generally anti-war and often more than a little isolationist, a long-standing theme in US public life. Conflicted emotions about the US as military world leader springs to life when it comes to political talk about the budget deficit. This is because the budget has two componentsmandatory spending and discretionary spending (the third component is interest on the debt). Mandatory spending is largely social spending on public pensions (Social Security), health care for the retired (Medicare), and unemployment benefits. Mandatory spending also includes a large portion for the military. All other spending programs pale by comparison. The 2015 fiscal year budget was 3.8 trillion or 21 of GDP. Of that total, 1.1 trillion was discretionary spending, i. e. programs selected and specifically funded by Congress. To the portion of the budget mandated for military spending, Congress added an additional 598.5 billion in discretionary spending, or 54 of discretionary spending, on top of the amount already existing under mandatory spending. But while defense spending may be 54 of discretionary spending, its 16 of total spending, according to politifact. The lions share of total spending does go to Health and Human Resources and Social Security. The perennial political debate between the two parties has the Republicans seeking to expand military discretionary spending while cutting mandatory social spending, and Democrats defending or wanting to enlarge social spendingwhile not necessarily also wanting to cut military spending at the same time. Republicans want deficits to fall while Democrats are seen as not much caring about the deficit level. This may not be accurate or fair, but its the common perception. Many of the Republican candidates, including Trump, claim to favor an amendment to the Constitution that would require a balanced budget. Trump also says he would not cut social programs. The only logical deduction from both positions is either a very big cut in defense spending or a tax hike for everyone. Since a cut in defense spending would never pass in Congress, that means a Trump presidency calls for a tax increase. A Constitutional amendment requiring a balanced budget is not likely but not impossible. And it would be a game-changer in international finance. Cutting the deficit back to zero would be wildly deflationary as the number of federally employed would fall from about 2.7 million persons today to some lesser number. The wage effect would ripple throughout every corner of the economy. Former bureaucrats would be mowing lawns. Conventional wisdom has it that deficits contribute to inflation and thus confidence in the US economy and financial system would rise dramatically if we had a balanced budgetas we see in Germany. In fact, the single mandate of the European Central Bank is to control inflation, while the US Fed has a dual mandate that adds keeping employment at a good level. A balanced budget amendment would be anti-inflationary and confidence-building in the long run but deflationary and confidence-destroying in the near term. Leading Republican candidate Trump has offered up many outrageous proposals, including building a wall along the Mexican border against illegal immigrants and making Mexico pay for it. He would also ban all Muslim travelers and immigrants, and other absurd (and unconstitutional) measures. Even his followers admit that much of what Trump promises is not possible or legal, but dont care. He has tapped into a vein of anger among voters that government is not delivering what the voters have asked for. After the wall on the Mexican border, Trumps biggest promise is to write a new trade deal with China, as well as repudiate the North American Free Trade deal and the Trans-Pacific Trade Pact. If a deal cant be made with China, Trump would like to just impose tariffs on Chinese goods. At one point Trump proposed a 45 tariff, although later he denied saying it. How realistic would that be Under World Trade Organization rules, the US imposing tariffs on China would be illegal. Under US laws, it could be done as an emergency measure by the Executive, even if Congress later reversed it. The outcome would be to raise the price of low-cost electronics (like notebook PCs and cell phones) so that less disposable income in American wallets would be left over for other things. China might have to shutter some factories, but we should also expect the stock price to crash of Apple, Walmart, Microsoft and all the other companies that rely on Chinese imports. Its interesting that Chinese retaliation would not benefit China, since most of what China imports from the US goes into making things it turns around and sells to the US. The trade imbalance with China is indeed a point of contention. We get cheap socks and phones, and China gets dollars with which to buy Treasuries and US companies. The trade deficit has grown from 83.8 billion in 2000 to 365.7 billion in 2015 . A giant tariff on US imports from China would not immediately result in old factories re-opening and new ones springing up all over the place. It would take some serious changes in the US educational system to replace China as the top manufacturer of so many products. One reason China gets the work is its millions of skilled laborers. The US educational system is not equipped to provide skilled workers and US companies are not accustomed to providing training. In the end, though, companies would be incentivized to return manufacturing to the US. Government tax receipts would rise accordingly along with demand for housing and other pro-growth sectors. Voters have been told since the days of Ronald Reagan that free trade benefits everyone. But faith in free-trade policies is now badly shaken. It looks good on paper but in practice, the US gave away the candy store without getting concessions from trade partners. All you have to do is look at the chart of the US-China trade deficit to see that Trump is rightthe US is getting the short end of the stick. Trumps attacks on China justify a great deal of his appeal among voters. Tax Reform The single thing that would boost the US economy the most would be corporate tax reform. The tax is so high35that companies are pretending to move overseas (inversion), while others have such devious tax lawyers that they pay no US tax at all, such as General Electric. Since 2012, twenty major companies have moved overseas to dodge taxes, including Burger King (Canada) and Pfizer (Ireland). Major multinational corporations spend as much on lawyers and accountants finding ways to avoid or defer taxation as they do research and development. Its stupid and cannot, seemingly, be fixed the current crop of presidential candidates all declare they want to throw out the current tax code and start over. But as a practical matter, you cant throw out the baby with the bath water. You need agreement on the new tax code for corporations before you can transition from the old one, and its too big a job for Congress to agree on. Congresss outright failure to solve the corporate tax problem is a key reason its approval rating is lower than 10. Clinton would impose an exit tax, which hardly solves the problem, and Trump would cut the corporate tax rate to 15. The probability of a corporate tax cut is higher than the probability of getting agreement on an exit tax. As for personal tax rates, every single candidate tries to pander to the voter by promising tax cutsexcept Sanders. Sanders would raise everyones personal tax rate, with progressively higher rates on higher incomes, while taxing capital gains as ordinary income. This is something the financial markets understand all too well and would respond to immediately if Sanders gets the nominationa massive sell-off in taxable assets. Critics also note that Sanders doesnt get the arithmetic right and overestimates the tax revenue that would arise from eliminating the low capital gains taxby some 3 trillion over a decade. Sanders also promises an economically unjustified trade-off of a 500 rise in the average tax bill in exchange for a 5,000 savings on health care. Economists point out that the Sanders arithmetic is just plain wrongreplacing private health insurance with government provision of health care would cost 4 trillion over the next decade and cost the average worker 8.4 of income in new taxes. This is a lot more than 500. Sanders also promises free university education for all but underestimates the cost, and proposes Congressional control of the Federal Reserve. This would take the form, for example, of barring the Fed from raising interest rates if unemployment is above 4. Giving Congress control of the Fed is unthinkable even among the most severe Fed critics. The Fed is the only institution in public life today that has independence from political interference and thus a modicum of respect. The financial sector that actually understands the role of the Fed would fight tooth-and-nail to defend its independence, at least its independence from a rule like the 4 proposal. Sanders is not likely to win the Democratic party nomination in July, but if he were to win, we can expect two outcomes: first, at least some sell-off in both equities and fixed income assets. The dollar might not respond much, but would be vulnerable to a sell-off in anticipation of even bigger government deficits. Secondly, the probability of a Republican victory by any candidate would rise. To conclude, presidential candidates make promises they cannot keep. The president is not a dictator who can unilaterally impose new laws. Congress and the judiciary serve as a check on executive power (and vice versa). Newly elected presidents hardly ever achieve their campaign promises, and certainly not in the first 100 days. Franklin D. Roosevelt was the one exception, and that was over 80 years ago in 1933. Roosevelt got fifteen major bills through Congress in the first 100 days, including the Emergency Banking Act and the bill ending Prohibition. Nobody else has come even close, unless you want to include the Civil Rights Act in 1964 under Lyndon Johnson, who at that time had not actually been elected but was fulfilling the job started by President John Kennedy in 1963 before he was assassinated. As a rule, the first year of a new presidents administration is accompanied by rising equities. That may not hold true if its a big-spending. tax-raising. populist who wins. Funny enough, we could be speaking as much about the Republican candidate Donald Trump as about the Democratic candidate Bernie Sanders. If these two are the official candidates, former New York mayor Michael Bloomberg has said he will consider entering the race as an independent candidate. Independents have a bad record in the US. In recent memory we have had a Texas millionaire, Ross Perot, who dropped out of the 1992 election, and consumer rights activist Ralph Nader, who is thought to have spoiled the 2000 election by taking votes from Democrat Al Gore, thus favoring Republican George W. Bush. But Bloomberg may be a different kind of animal. For one thing, Perot and Nader started out as single-issue ideologues and thus fringe, whereas Bloomberg is well-rounded and widely respected. Betting websites give Bloomberg a good shot at winning the presidency. See the table below. Also interesting from the betting websites is that Ohio Governor John Kasich performs well. Kasich is sane and reasonable, has experience in deficit cutting during the Clinton administration, and refrains from ridiculous rhetoric, if also being utterly without charisma. At a guess, Kasich could become everyones first choice for vice-presidential running mate. As for the other candidates, Marco Rubio is perceived as lacking poise and being too green. Dr. Ben Carson will fall out from lack of government experience (and believing the Egyptian pyramids were built to store grain ). He is not even listed in the betting tanks. As noted above, Jeb Bush is probably overly contaminated by his acceptance of brother George Ws neo-con foreign policy advisors. Bottom line, the consensus that Trump will become the next US president seems outlandish and yet not out of the question. Of the key issues, Trump is basically right about taking China to task on trade, about raising taxes on the rich and trying to balance the budget, and about using military resources wisely, even if his impulsive style is worrisome. Politicians and the Dollar Noted above is that a Cruz presidency would drive investors away from the dollar because of suspicions he would shut down the government to get his way. A Clinton presidency would likely be a continuation of the Obama administration, with a low level of militarism but also no change on taxes. To be fair, very little that a new presidential administration does can affect the dollar. The key factor influencing the dollar is interest rates, both the trend in the US own rates and the differential with other major issuers of sovereign debt. That makes the key player the Federal Reserve, not the president. But Trump has some ideas that would likely cause a dollar sell-off. even if in the long-run. they have the potential to favor growth and employment. Trumps idea of imposing tariffs on China is the most risky. As noted, it would make goods more costly for Americans but it also invites retaliation in the form of China potentially dumping a portion of its reserves held in US dollars, about 1.264 trillion as of the latest official count (November 2015). If the supply of Treasuries were to increase by that much over a short period, the price would get driven down (and the yield up). To replace Treasuries with notes and bonds denominated in another currency, China would be a massive seller of dollars. The first announcement of a US tariff would almost certainly set off a general dollar sell-off on the bandwagon effect. Another potential political dollar-mover is a tax break for companies repatriating money held overseas, something Trump also embraces. The amount is estimated at 2.5 trillion. To be fair, the dollar got a boost sporadically when Congress passed a one-year bill in 2003 allowing repatriation of corporate profits for a low 5 tax. The purpose of the bill was to fund capital investment, especially in research and development, and hiring workers. But companies were not required to use the money for any specific purpose and the plan didnt work to boost employment. The Council of Economic Advisers) found that for every dollar companies brought home, 60821192 cents went to hikes in dividends and to stock buybacks. Congress found that the top 15 repatriating corporations repatriated more than 150 billion during the holiday and then proceeded to cut U. S. workforce by 21,000 between 2004 and 2007. Pfizer, which repatriated more than any other company (35.5 billion), cut 11,748 U. S. jobs over the next three years. Repatriation entails selling the foreign currencies in which overseas profits are held and buying dollars. In the end, companies repatriated 312 billion, much of it late in the year. But this is a small sum in the context of the overall FX market of over 1 trillion per day. Still, there were some weeks when the repatriation was seen as a dollar driver. USDX vs. Government Shutdowns Ahead of the government shutdown in 1995. the dollar index had already fallen hard in September, but not because of the looming shutdown. The Federal Reserve had cut the Fed funds rate from 6.0 to 5.75 in July, and the dollar was sold off in September in anticipation of another cut at the September FOMC. That cut didnt come, however, until December 19 (to 5.50). Meanwhile, the Dow Jones Industrial Average closed over 5000 for the first time on November 20. Stock market participants almost always increase equity holdings when rates are falling. Expectations about the Fed were the driver of the dollar that fall, not the shutdown. The dollar index bottomed in late October and proceeded higher to surpass the September high by year-end . The more recent government shutdown was October 1821116, 2013. Again, analysts were surprised that it had less effect on the dollar than other events. For one thing, mandated government spending cuts (sequester) had already started in March. Also in March, the Cyprus sovereign debt crisis hit, ending in a depositors bail-in for the first time in modern times. In May, August and October either the Dow or the S038P 500 made new record highs as the fixed income market gnashed its teeth over tapering of QE. In October 2013, as the government was shut down, financial market commentary was more focused on when QE would end than any other single subject. The dollar index opened on October 1 at 80.27 and closed October 15 at 80.48. This reflects that the shutdown was not a high priority for the FX market. About the author: Barbara Rockefeller is an international economist with a focus on foreign exchange. She has worked as a forecaster, trader, and consultant at Citibank and other financial institutions, and currently publishes daily reports on foreign exchange for RTS. Rockefeller is the author of The Baby Boomer Survival Guide (Humanix, 2014), The Foreign Exchange Matrix (Harriman House, 2013), Technical Analysis for Dummies (For Dummies, 2004), 247 Trading Around the Clock, Around the World (John Wiley 038 Sons, 2000), The Global Trader (John Wiley 038 Sons, 2001), and How to Invest Internationally, published in Japan in 1999.
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