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SAME FIGHT, DIFFERENT OPPONENT!

As the world knows, Joe Biden has decided to step away from the race and he, along with the Democrats, has essentially “coronated” Kamala Harris. I found it amusing that the same people who argue that Trump and the Republicans are an “existential threat to Democracy” just shoved democracy into the corner. I was having coffee with my good friend, Tony Peccerillo, and he mused that it is interesting that we still think we have a choice when you see the machinations currently occurring in the Democratic Party. My concern is that the government is not getting it and whoever wins this election is going to have to get a real handle on fiscal policy.

As it relates to markets, before the Biden announcement it seemed that the market had decided we were heading for a Trump victory, and we even had a “Trump Trade.” Regardless of any feelings about Kamala Harris, her candidacy has turned this back into a race because she is younger, lucid, and represents a completely different candidate for Trump to battle. I can pretty much see the next debate in my head. Trump will thunder she is incompetent, by referencing California and the porous border, and Harris will retort that he is a convicted criminal. In other words, politics as usual.

This morning, I was reviewing the most recent release from Citi on credit card details in the United States. This analysis covers the spending on 95 million credit cards, so I have always believed it to be a good cross-section of middle America. There are three key takeaways. First, over the last thirteen weeks, there has been only one week when the number of transactions has increased, and for the entirety of the past thirteen weeks, total spending and total spending ex-food have declined. It appears that discretionary consumer spending is becoming more discretionary. The importance of the consumer in the American economy cannot be overstated. We will need to see if the spending pattern of consumers over the last thirteen weeks portends continued consumer weakness and if that translates into economic slowing. Certainly, more to come.

I thought there might have been more of a pause on political rancor after the attempted assassination of Donald Trump. Alas, we are back to the usual politics, and it will only ramp from here. The market was heavily focused that a Trump win, coupled with gains for Republicans in the House and Senate, would likely extend tax cuts and focus on a pro-business and pro-economic legislative agenda. With Harris in the race, the election moved back to being more competitive because the independent voter was not likely going to vote for a diminished President Biden. Now, the markets need to focus on the real possibility of a Harris presidency and the media is anointing her as a savior despite her weak showing among Democratic hopefuls in 2019. The change in the election landscape will add to volatility. We are attuned to this change and will keep you abreast of our thoughts.

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