Pricing in President Trump

Bloomberg: China Is a Growing Threat to Global Competitors, Kroeber Says
Question: Is China becoming more mercantilist?

Answer: It’s fair to say that. And you can make this on objective grounds. If you just look at the size of the merchandise trade surplus and balance of payments, this has almost doubled from under 3 percent of GDP four to five years ago and it’s now back up to almost 6 percent of GDP. There’s no strong policy emphasis on managing down the trade surplus.
Then you look at the specifics of ‘Made in China 2025.’ It’s a whole set of numeric targets and, if you add them up, it’s very clear that the aggregate impact of that would be to increase China’s trade surplus. You have embedded in the policy directionality something that is a targeting of essentially an increase in the trade surplus.

Question: So is Donald Trump right about China?

Answer: You could say he’s right in a narrow sense, but OK, what do you do with that? China is clearly moving in a more mercantilist direction, but in a broader sense of how you deal with this I think his recipe is ludicrous and unrealistic. You have to recognize that pretty much every country as it develops spends a lot of time taking a mercantilist view of the world, with no exceptions. The United States was a prime offender for about 120 years up until after World War II. This is what most countries do. It’s also the case that if you compare China to most other emerging markets, India, Brazil, and many non-emerging markets such as Japan, they’re much more open to a larger array of foreign investments and activity than those other countries. By far.

Question: Are trade wars coming?

Answer: In the U.S. you have Donald Trump for example who in the Republican primaries was able to get a lot of support for ideas like a 45 percent across-the-board tariff on Chinese goods, which I don’t think is going to happen even if he gets elected. But what the success of the Trump and the Bernie Sanders campaigns have done is move the whole discussion in the U.S. much farther away from the question of how do we make trade and investment more open to how do we set up more protectionism.
What's the alternative to Trump or Sanders? There is none. Just as there was no opposition to immigration, which now has a string of shock victories.

Socionomics Alert: Shock Brexit Poll, UKIP Playbook Stolen
Immigration restriction is the most popular orphan policy in the West. It was taken up by UKIP to a shock victory in local elections, it was taken up by Trump for a shock victory in the GOP primary. Merkel's decision to open the floodgates to migrants and open the door to Turkey was the exact wrong policy for the moment.

2015: Immigration: The Key Political Issue
2014: UKIP Scores Big Win in Local Elections; Shockwaves Will Hit Europe and the U.S.

A low probability event, but one that would signal a watershed election is underway, would be a loss by Paul Ryan in the primary. Eric Cantor, the highest ranking sitting Congressmen ever to lose a primary, at the time GOP majority leader, was knocked out two years ago: The U.S. Swings Right: House Majority Leader Defeated in GOP Primary. At the time I wrote:
Cantor was very heavily funded by corporate interests. He was an otherwise very conservative candidate in a conservative district in Virginia, but voters rejected him due to his position on immigration, specifically amnesty.

This issue in the U.S. is almost exactly like the situation in the U.K. There is no major political party and no major politician discussing this issue. If any presidential candidate takes up immigration restriction as an issue, they will meet the same vitriolic resistance that faced UKIP, but the results at the ballot box will be the same.
Turning to Ryan: As Paul Nehlen Gains Traction, Globalist Paul Ryan Does Local Interviews
Ryan is being challenged by Wisconsin businessman Paul Nehlen, whose campaign centers upon the idea that Ryan “betrayed” Wisconsin voters by pushing open borders immigration policies and the fast tracking of President Obama’s Trans-Pacific Partnership (TPP) agreement.

In a Saturday media alert, Ryan’s office announced that “House Speaker Paul Ryan (R-WI) will appear on two Wisconsin radio stations in the coming days—WBEL’s The Daly Show on Sunday, June 26 at 9:00 a.m. ET/8:00 a.m. CT and WGTD’s The Morning Show with Greg Berg on Monday, June 27 at 9:10 a.m. ET/8:10 a.m. CT.”

The announcement and the interviews follow Nehlen’s launch of a new billboard campaign that takes aim at Ryan’s two-decade long history of pushing for open borders immigration policies.
There's little polling data so it is impossible to make predictions, but undoubtedly if there was a market, it would be mispricing the odds of a Ryan defeat.

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