First Unelected President Since Gerald Ford?

Well, that happened. 

President Joe Biden announced the end of his candidacy yesterday… and threw his weight behind his vice president, Kamala Harris. 

We told you so.

Back in November, Freeport Society friend Louis Navellier and I warned that Biden would be forced out by the time of the Democratic National Convention in August. 

We didn’t know what the exact catalyst would be… 

That Biden would deliver what will probably be remembered as the worst presidential debate in history… 

Or that former President Donald Trump would come within an inch of losing his life – literally – in an assassination attempt. 

But it was obvious to us half a year ago that this was coming. Now the moment is here. 

This question of course is what happens next?

We’ll see if Kamala Harris actually comes away with the nomination… or whether another shadow candidate emerges. Most of the major Democrat power brokers, including Biden himself, have pledged to support her. And as the sitting vice president the job is essentially hers to lose.  

But if this year has taught us anything so far, it’s to expect chaos. A lot can happen between now and August 19. Even more can happen before the November 5 election.  

But just for grins, let’s map out what the next few months could look like.

My assumption is that we’ll see a President Harris before November 5. 

If Biden wants to improve Harris’s chances of winning, the logical move would be to step aside, toss her the keys to the Oval Office, and let the American public get used to the sound of “President Harris.” 

In doing so, Biden fulfills his original campaign promise to elevate women of color and he gets to retire with what small shred of dignity is left. 

Biden has pledged to serve out the remainder of his term. But remember, as recently as Saturday he was still pledging to stay in the race. So clearly, “pledges” are flexible.  

For the moment, the betting markets are pricing in a 62% probability of a Trump victory and a 32% probability of a Harris victory with most of the remaining odds allocated to long-shot candidates like Michelle Obama. 

Those odds might change. But until they do, I’m operating on the assumption that Trump wins the election. 

As I wrote last week, we should prepare our portfolios for both the opportunities and the risks that entails. And Louis and I discussed some investment strategies in our chat on Friday.

But what if Harris wins?

Let’s consider the risks and opportunities facing our portfolios then… 

Investing Under a President Harris

The first thing to remember is that a Harris presidency is a continuation of the Biden presidency. There won’t likely be a lot of major policy or personnel changes. Janet Yellen is likely to remain Secretary of the Treasury and there will be relatively little political pressure on the Federal Reserve. 

I don’t necessarily consider all of this a good thing. After all, the Biden administration has been heavy handed on regulation and interventionist policies… and Yellen presided over the biggest inflation in 40 years as Treasury Secretary. 

We should also remember that the Trump tax cuts are scheduled to expire at the end of 2025, and the likelihood that a Harris administration would renew them is for all practical purposes zero.

So, all else equal, a Harris administration might be less bullish for the stock market or at least certain sectors like financials and energy.

But while there are things that would be different in a Harris vs. Trump administration, there is also quite a bit that would be just about 100% the same. 

Under either a President Harris or a President Trump, we’ll see multi-trillion-dollar budget deficits as far as the eye can see and continued erosion in the credibility of the dollar. That $35 trillion in national debt that both Trump and Biden massively contributed to doesn’t just magically disappear.

So, you’re going to want to hedge your dollar risk either way. 

This is a trend that is likely irreversible at this point, no matter who wins the White House. 

You’re also going to see relations with China continuing to circle the drain. 

Globalization was already looking wobbly as far back as the George W. Bush and Barack Obama administrations, before plunging to new lows during Trump’s time in office. Yet rather than reverse course, Biden arguably out-Trumped Trump by stepping up the trade war with China. 

Would Harris follow suit? 

Probably. 

During the Cold War, it didn’t really matter whether a Democrat or Republican controlled the White House. General policy toward the Soviet Union more or less stayed the same. I expect a similar situation today. There is no Republican or Democrat China policy at this point. There is an American China policy. 

Of course, a breakdown in globalization creates opportunities here at home, particularly in robotics and automation. These are core investment themes in my investing service, The Freeport Investor. 

I don’t pretend to know how all of this plays out. But I do know that chaos creates opportunities. So, bring on the chaos. We’re ready for it!

To life, liberty and the pursuit of wealth.