Pundits Wring Their Hands

Uncertainty is as much a part of life as life itself.

Only a few groups try to outlaw it, the PC crowd, those with bad cases of OCD and market pundits.

The hand wringing going on by the pundits since the Trump election is both amazing and amusing. It's amusing because it couldn't happen to a nicer more staid bunch. It's amazing because change and uncertainty often travel the same paths. Trump represents change as did Mr.Obama who actually ran on it as a theme.

Trouble is most bought into the big lie it was going to be good change. More than 55 million Americans just voted it wasn't. So the negative crowd are ramping up the what if game. It's a fun game, so let indulge a bit.

They're enumerating all their concerns:globalization, trade tariffs emerging markets and protectionism. Then there's that wall. "Tear down that Wall, Mr. Gorbachev," said one of the most hated presidents in U.S. history. Now another one, probably even more hated and he hasn't even taken office yet, has bellowed about building another wall and  telling it's builders to pay for it.

It's more than a bit interesting how often these worriers cough up the terms democracy and law when they make their case about markets and such. One would guess--and it's a huge guess because of how selective they are--they're talking about the rule of law and property rights. John Authers of the Financial Times, "Ugly new world risks bringing even US back to emerging market status,"writes:

But we should all step back and look a little deeper about what is implied. The last great emerging markets bull market, from 2002 to 2008, was predicated on the notion of “decoupling” — that the emerging world could continue to thrive even if the developed world fell into recession. The EM crash during the financial crisis disproved the notion. Now, we have moved to the idea that the US can prosper as the emerging world languishes.

This is also a questionable, for a reason that goes beyond economics to the deeper cause for the gap between the developing and emerging markets: their institutions. It is a weak institutional structure that keeps a country in emerging status. If democracy or the law is weak, if there is not a backbone of trust or an agreed route to combat corruption, development and growth are far harder.

Lacking full shareholder protections, EM companies are likely to be controlled by families or founding institutions, or by the state. Companies with the widely dispersed ownership in the US are unusual.

Apparently, Mr. Authers and his flock pulled a Rip Van Winkle during the Obama crowd's stay in Washington and their astonishing attack on property rights and the rule of law. Somewhere in there is the word trust and an agreed route to slay corruption.Three quarters of that description to us just defined the U.S. Federal Reserve Bank and it intimate relationship with their Wall Street families.

 We said these people have their selective memories. Authers then brings up rumors that Trump  would go after corporations and individuals who publicly derided him in the campaign. "Such things," he notes, "do not happen in a healthy and functioning democracy." He conveniently omits that Mr. Obama's known hit list of those those differed with him was longer than that of the so-called paranoid one, Dick Nixon.

And that brings us back to what if. What if all these hand wringing, the sky-just-fell pundits who would have others endorse unwanted changes but feverishly resist it themselves are wrong? Our advice is play the markets accordingly and don't expect any mea culpas from this crowd.