CORRIERE DELLA SERA Giovedì 3 Marzo 2016

INTERVENTI E REPLICHE Come spiegare Donald Trump agli italiani Molto spesso i miei amici, sapendo che io sono d’origine italiana e un amante dell’Italia, mi chiedono se Donald Trump è il nostro Berlusconi. In effetti ci sono tante similarità. Forse la maggiore è che tutti e due sono, in un certo senso, quasi caricature delle loro rispettive identità nazionali. Una volta Giorgio Gaber ha detto «non ho paura di Berlusconi in sé, ho paura di Berlusconi in me». Credo si possa dire la stessa cosa per Trump: per molti americani lui è semplicemente troppo americano. Troppo sfacciato, troppo ricco, troppo rozzo, eccetera. È ironico, ma è la verità. Per molti americani non è bello vedersi riflessi in Trump. Lo scorso agosto in un rapporto per Strategas avevo paragonato Trump a un titolo finanziario speculativo che porta con sé il rischio di non essere acquistato. L’attuale successo di Trump si spiega con le sue posizioni su tre problemi: l’immigrazione illegale, lo scambio «libero» con nazioni che fissano la loro valuta, la correttezza politica. Non pensarla come Trump su questi tre temi sembra a molti un insulto al buon senso, specialmente ai bianchi disoccupati. Alla fin fine, Donald Trump può anche commettere un suicidio politico, ma immagino che la corsa alla presidenza diventerà ancor più spettacolare. La rabbia del popolo americano contro la classe politica è cosi forte che sarebbe sbagliato pensare che Trump non possa vincere. Jason DeSena Trennert, fondatore e capo di Strategas research partners, New...

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WSJ Op-Ed: In Defense of Demonized Wall Street

‘I happen to believe that the business model of Wall Street,” Democratic presidential candidate Bernie Sanders said earlier this year, “is fraud and deception.” Hillary Clinton is only slightly more subtle. “I went to Wall Street,” she said in the recent Democratic debate, “in December of 2007—before the big crash that we had—and I basically said, ‘Cut it out! Quit foreclosing on homes! Quit engaging in these kinds of speculative behaviors!’ ” Even Donald Trump has gotten in on the act. “The hedge fund guys didn’t build this nation,” the billionaire Republican candidate told CBS. “These are guys who shift paper around and they get lucky.” Given the magnitude of the past decade’s financial crisis, it isn’t surprising that political opportunists are running against “Wall Street.” What’s surprising is how unsophisticated the arguments have become. Attacking finance, an industry that, according to the Bureau of Labor Statistics, employs six million people in the U.S., the vast majority of whom are in the middle class, has become an intellectual freebie. Those of us committed to the industry feel no need to defend the indefensible—like predatory lending—committed in the name of “financial innovation.” We also don’t oppose common-sense regulations such as higher capital requirements for companies considered too big to fail. Still, many of us are saddened by how little political leaders and pundits understand capital markets or appreciate their role in powering the greatest economic engine the world has ever known. Many of them seem to see banks as useful only for storing wealth and facilitating transactions—providing savings accounts and debit cards. Virtually no attention is paid to the next step, which is turning those deposits into capital. Money that banks lend to businesses is transformed into productive resources—factories, machine tools, trucks and the like. The West’s establishment of property rights, and the banking system that grew up around them, turned assets into capital—and the ambitions of entrepreneurs and inventors into reality. Modern banking, while imperfect and subject at times to excess, has been an enormous contributor to human progress, which has put a serious dent in the crushing poverty that was once, even among Western countries, the norm rather than the exception. The ability to raise capital breathed life into the dreams of Vanderbilt and Rockefeller, Gates and Jobs. Charlie Merrill, co-founder of Merrill Lynch, was the first to understand that the distinction between “Wall Street” and “Main Street” was artificial. He believed that the average American—not just the wealthy—should be able to buy shares in the country’s greatest companies. His legacy has allowed untold millions of savers to put money in the stock market and retire in comfort. Listening to the politicians, populists and pundits, one might be forgiven for thinking that Wall Street is comprised only of soulless overachievers who will do anything to make a buck. High finance, like any other business, does have its fair share of scoundrels. But the financial-services industry also includes hundreds of thousands of regular, middle-class people. They take the subway to work. They worry about paying the mortgage and sending their children to college. And they do their best to provide their clients with quality advice and good service. Since the financial crisis, it has been increasingly popular to draw distinctions between Americans: rich and poor, black and white, men and women, whatever. It would be nice to see a political candidate emerge...

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WealthTrack: Unappreciated Bull Market

Despite the fact that we have had an almost uninterrupted bull market for the last 6 years, investors have remained largely unconvinced, favoring bonds over stocks by an overwhelming margin. Are the best years of the bull market now behind us? Are equity markets becoming too volatile and risky to navigate safely?  This week’s guest doesn’t think so. Financial Thought Leader, Jason Trennert, Chief Investment Strategist of Strategas Research Partners explains why US stocks are still a good deal for investors (click here to view...

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Barron’s: Profiting From Weakness in Washington

Barron’s “I’ll give you 3:1 odds you can’t come within 500 of the number of people who work at our embassy in Baghdad,” challenged one of my knucklehead friends at Rothmann’s on a recent Monday night. Familiar with the animal, knowing I was getting set up, and recognizing the fact that I almost always pay for the drinks anyway, I played along for a fin. “Ok, you’re on. Five bucks at three to one.” “Five at three to one.” Looking down at the sweating rocks glass in my hand for inspiration, I thought for a moment and said, “I don’t know, 1,500?” He smiled like a Chesire Cat. “Try 5,500, hotshot…Your tax dollars at work.” At this point he raised his glass in toast – “power to the people.” Power to the people indeed. At an age at which I find it hard to be shocked by just about anything except for perhaps excellent service and public displays of class, I was stunned. I have heard tales of government waste consistently for the past thirty years (remember the $600 hammer from the ’80s?) but still, I wondered — is it possible that 5,500 people could be productively employed at one of our embassies anywhere, much less Baghdad? I then started to think about how demoralizing the news for Americans had been of late – al-Qaeda affiliate ISIL had recently taken over large swaths of Iraq, tens of thousands of immigrants are flooding across our southern border risking a humanitarian crisis, and, according to a recent Investor’s Business Daily article, a record numbers of Americans are renouncing their U.S. citizenship. This all happened on a day when the medical device company Medtronic (ticker: MDT ) decided to buy Covidien ( COV ) with its foreign-sourced holdings, inverting itself as a company domiciled in Ireland despite recent warnings from lawmakers that such fancy financial footwork would never stand. Human beings, it has been said, are among the most efficient pattern-recognition machines in the universe, often, it seems in order to be fair, to the point of trying to link variegated pieces of information that have no relationship with one another whatsoever. Still, it seemed to me, that there was something that tied these events together. It would, of course, be far too strong to call it “anarchy,” but there appears to be a discernible willingness on the part of political movements, corporations, and individuals to take a chance by standing up to previously recognized, and often feared, American authority. Add to this an almost unheard of primary loss by a member of the Republican leadership with a war chest to an unknown college professor with a piggy bank and the sense that the normal rules don’t apply has only grown. I say all this not to make any normative judgment about the quality of our leadership but to suggest that we are well past the point at which the political class has any political capital left whatsoever. With five months left until the election, both sides of the political aisle appear to have reached a stalemate that is now unique only to the extent to which it is now being openly challenged. As we know, nature hates a vacuum. As partner and head of Strategas’ Washington office Dan Clifton pointed out...

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The Wall Street Journal: The Stock Market and the ‘Tina’ Factor

Ernest Hemingway once said “the first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” Papa Hemingway saw more than his share of political fraudsters in his day, and he captured a central truth—profligate fiscal policies have generally led countries to extricate themselves from their difficulties through sleight-of-hand rather than true reform. A more modern form of inflation—financial repression—is being undertaken today. Here the wayward state seeks to pay negative real interest rates on its debt and thus, it hopes, allow inflation to chip away at its principal over time. Savers pay the price. Today, the Federal Reserve is the instrument of this surreptitious wealth tax—buying roughly 60% of the net new issuance of Treasurys in 2012—and the main reason why an investor in a money-market fund can only get 0.02% on his cash while inflation is close to 2%. That helps explain why the first quarter of 2013 saw both the Dow Jones Industrial Average and the S&P 500 hit record highs. Investors are taking the “Tina” approach to common stocks: In the late 1970s British Prime Minister Margaret Thatcher was nicknamed “Tina” for her response to critics of her steadfast support for free markets—”There is no alternative.” With the world’s global central banks closing off all other exits, savers are turning into Tinas. Ultimately there may be no alternative for investors seeking returns above the rate of inflation. The good news is that there are more than a few common stocks that can realistically be seen as good proxies for what was previously thought to be unassailable returns on sovereign debt. After Uncle Sam’s debt was downgraded in August 2011, insuring the bonds of 55 private companies was cheaper than insuring U.S. Treasury debt. Today, 27 companies could claim to be better credit risks than the U.S., and a stunning 126 have lower bond-insurance rates than those charged for French sovereign debt. With the number of public companies shrinking and the pool of triple-A credits dwindling, it wouldn’t be difficult to see a new “nifty 50” of sorts, with investors putting more and more money to work in a relatively narrow list of companies that can provide what the Fed and other central banks are taking away. Companies like Merck and McDonald’s might not have the authority to tax American citizens or possess nuclear weapons, but they do possess something the federal government doesn’t have—money. All can boast of dividend yields that greatly exceed what an investor can earn on 10-year U.S. Treasurys. For Merck and Chevron, the yields are greater than for 30-year government paper. There has been much recent talk of a “great rotation” into equities from other asset classes, but such a rotation is in its infancy, if it is truly happening. The weekly data for 2013 indicate that equity-fund sales are up meaningfully in the early part of this year, but the phenomenon would have to last longer than three months to signal a bona fide shift in the attitude toward risk. There is even less evidence to suggest that fiduciaries like pensions and endowments have started to use the long equity portion of their portfolios to make...

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The Wall Street Journal: What Monday Means

Kudos to Jason DeSena Trennert for starting a campaign to bring the poppy back to Wall Street. On Tuesday, Mr. Trennert and his colleagues at Strategas Research Partners will be wearing red crepe-paper poppies and also sharing them with clients. He’s trying to renew a great tradition.

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