This is the first of a series of posts based upon an extensive program sponsored by the National Association of Corporate Directors on November 20. The focus was on what the results of the election meant for different kinds of business, for capital and investment markets and for the economy in general. Each section will have specific focus as indicated by the titles.
I start here with general observations that apply to all businesses and markets. Stability and predictability are essential for good business, and for companies and their boards making decisions that have some likelihood of being accurate. Did the expert panel believe that the new administration would provide such predictability? The answer was mixed; it depended on what sector you were looking at. Those sectors will be explored in future posts. BUT there were a couple of general themes:
First, business generally has been optimistic about a Republican administration and in some sectors that will be justified.
Second, the left wing of the Democratic party was described as arming itself for many fights. This was characterized as the wrong posture. The basic posture of the Democratic Party, based on its sweeping loss, is going to be reconsidered based on the new reality, and the liberal wing will not call those shots and should not because continued internal war based on historical causes neither works (the election itself being proof) nor addresses the needs of the country. The country needs engaged counterbalance to what may well be new directions, and influence will come only by engaging the issues rather than drawing battle lines. There will be many matters where the benefit of new directions clearly will be positive. To fight all the time impedes progress, upsets businesses and spooks the stock market, the investment climate and the M&A process. It was noted that in some areas, the people being proposed for governance roles are centrists (putting aside the flack about the character flaws of others which are not ultimately central to the business of America).
Finally, be ready for material change. Putting aside the promise to punish the enemy within, which by the way the panel thought would occur to some degree in the early stages of the new administration because Trump said it, believes in it and will be compelled to act upon it, the broader economic picture will be very disruptive. Both Trump and Musk are masterful disrupters and they will act true to form. After a passing reference to issues of Musk’s personality, the panel thought that this new duo would have positive material impact on many aspects of US business: scientific advances including in climate and medicine, and AI (much more about AI later as the panel thought this the key to both near term and long term business health and also the US’s position in the business and geo-political world arenas as well as fundamental to national defense concerns).
Future posts will address: immigration and the sensitivity that Trump will have as to economic impact; how governance will proceed and the roles of Congress, personnel appointed and use of Executive Orders; the role of China in geo-politics and the impact of Chinese inroads vs domestic problems, and possible impact on world peace; the consideration of the EU given that all big business in the US is involved there; the interplay of interest rates, the bond market, inflation and CapX; how directors need to conduct their business in the new environment; how the administration ought to deal with Mexico and particularly Canada (our governments may be at odds but Canada is our biggest trading partner and the most logical source of the massive power we need to keep data centers alive 24-7 as that is the key to the vital task of winning the AI war); the future of ESG; how all this impacts the Middle East and Ukraine.