What if George Washington and Thomas Jefferson ran for president in 2020? How would public opinion, the media and the markets react? Probably with horror and dismay. Professional mud diggers, who are legion in America and have specialized studios with large funds at their disposal, would have an easy game.
Both rich and very attached to their properties, the two candidates would be singled out as having countless potential conflicts of interest. Washington would be relentlessly attacked for his 317 slaves and Jefferson for his 650. The 83-year-old sick slave that Washington keeps working from sunrise to sunset would be brought on television. The letters in which Washington writes that "there are few Negroes who work if they are not constantly supervised" and the one in which he congratulates his farmer for having used the whip with a lazy slave and urges him to be even more hard. Saturday Night Live would disgrace the candidate for his one remaining tooth and his dentures made from slave teeth.
As for Jefferson, in addition to the declarations on the inferior intelligence of the slaves, we would see in the newspapers and on television, at all hours of the day, the photo of the 10-year-old boy at work on his plantation and that of the sick XNUMX-year-old slave whipped three times a day. day. But the highlight would be the interviews with Sally Hemings, the slave Jefferson got pregnant at 16, when he was 46, after two years of relationship.
America has been in the middle of a cultural civil war for half a century but we must never forget that in this conflict the civil themes are intertwined with the political ones, which in reality are often dominant. The Weinstein case, beyond the specific merit of the story, is the attack on Hollywood-Anti-Trumpian Babylon and follows the Uber scandal by a few weeks, held up as a symbol of a male chauvinist, corrupt and also anti-Trumpian Silicon Valley. The Moore case is the symmetrical, potentially devastating attack on the Gothic and Trumpian South.
Moore is the Republican nominee for senator from Alabama. The elections are on December 12th. Alabama is an ultraconservative state that was Democratic and segregationist until the XNUMXs. Until then, the liberal North and the supremacist South had coexisted in the Democratic Party. When Democrat Kennedy sent an army division to Alabama to force Democrat Governor Wallace to respect the civil rights of blacks, the South abandoned the Roosevelt coalition of the New Deal and became a Republican.
Today, it is not the Democrats but the Republicans who are split and the South is at serious risk of becoming democratic again. Moore is endorsed by Bannon, who wants to liquidate the Republican establishment and replace it with economic nationalists and populists while Trump cautiously looks on. Bannon was starting to win all the primaries with his men and Moore was also projected towards a large success when some women appeared to denounce abuses committed by him in the eighties. In these hours a robot is phoning all the houses of Alabama to solicit the denunciation of other eventual abuses committed by Moore, who denies any wrongdoing. In any case, the damage is done. Either Moore will retire or he will still be beaten by a Democrat.
What is interesting is that the violent attack against Moore sees in the forefront not the Democrats but the establishment Republicans, willing to lose the senate (and possibly the chamber) in order to block Bannon. There is logic in this. If the Bannon movement isn't nipped in the bud, much of the Republican establishment will be wiped out in the next primaries. Losing a majority in the Senate is a bearable price if the alternative is to be sent home forever.
The searing defeats in Virginia and New Jersey last week and the possibility of losing Alabama as well are working wonders in helping Republicans in Congress, including the leading ladies of the Senate, to focus and maximize the acceleration of tax reform. In the next few hours, the chamber will approve its final version in the courtroom. The text that the Senate is working on also includes a first piece of healthcare reform that saves the government money and reopens hopes for a broader reform during 2018. Even if there were a postponement of the corporate rate to 2019 to 20 (and it is not said that there is) it is good to remember that
1) The rate seems confirmed at 20, without the feared upward adjustments that were emerging
2) The reduction will be definitive and not limited to 10 years, as was beginning to be thought
3) Investments can be fully paid for over the next 5 years
4) The deductibility of interest expense will be limited to 30 per cent of Ebitda, but with such low rates there will be repercussions only for highly indebted companies. At the margin, leveraged buy-backs will be disincentivised, which strategically is good news, not bad news.
The majority is very small, but there are no particularly determined internal opponents. Senator Johnson is putting his foot down and pointing out how big businesses have been helped more than small ones, but he's a reasonable man and will eventually follow along. After Thanksgiving, the two chambers will work to reconcile the two texts. The text of the senate will prevail and Rayan has already given the assent of the house to some points in which the senate differs from the house. By the end of the year or the beginning of 2018, everything could be on Trump's table, which he will certainly approve without sending the text back to Congress.
In recent days the markets have tried to lay the groundwork for a significant correction. In addition to the doubts about the tax reform, there was the disappearance of the positive surprises on growth and inflation and the arrival of some small negative surprises on these two fronts. In Europe, the correction was stronger due to the effect of the dollar, an increasingly pro-cyclical element. Volatility and price levels were being touched that could easily have produced more volatility and other falls, but the spiral was broken by the acceleration of the tax reform and its aggressively pro-business content in the latest version.
The limited correction we have seen has occurred with low volumes. Few sellers, fearful of missing out on the last leg of the big rally, and few buyers, fearful of getting stuck in a larger correction or even a gestating bear market. As can be seen, it was present in all of them the feeling that the big rally is in its final stage. Which tells us that, after all, all this complacency doesn't exist and that a small upward squeeze, with the tax reform in the pipeline, is still possible. It tells us, even more, that although the markets are loaded, satiated and tired, we are not yet ready for a bear market.
