By Michael Every of Rabobank

Yesterday’s speech and interview from VP Harris to explain her economic plans didn’t generate headlines in the economic press. As her interlocutor MSNBC’s Stephanie Ruhle admitted afterwards, “One could watch and say she didn’t give a clear and direct answer. And that’s OK, because we’re not talking about clear and direct issues.” Just the US economy!

Ruhle: “One could watch and say she didn’t give a clear and direct answer. And that’s okay, because we’re not talking about clear and direct issues.”

Embarrassing. pic.twitter.com/gxsNDzRXAV

— Trump War Room (@TrumpWarRoom) September 25, 2024

I was going through the transcripts of the speech and interview to dissect them and contrast their policies with the radical ones proposed by Trump when I suddenly realized: why bother? The Harris presidential campaign clearly doesn’t want to clarify what an “Opportunity Economy” means beyond the $6,000 (first child), $25,000 (first home), and $50,000 (small business) tax credits we’ve known about for weeks. The financial and mainstream media don’t care that they don’t have any details either. Moreover, neither do markets, which are talking about anything but what was said in Philadelphia yesterday. Perhaps voters don’t either – and we will only know in November.

As Ruhle had said on the Bill Maher show days before her Harris economy chat: “So let’s say that you don’t like her answer. Are you going to vote for Donald Trump? Kamala Harris is not running for perfect. She’s running against Trump. We have two choices. And so, there are some things you might not know her answer to. And in 2024, unlike 2016 for a lot of the American people, we know exactly, exactly what Trump will do, who he is, and the kind of threat he is.” Ruhle then concluded, “to democracy.” For markets, it’s to free trade; low inflation; the ability to set high interest rates independently; US public debt; the green agenda; big pharma; big food; and US foreign policy and global security.

It wasn’t too long ago that on Bill Maher’s show Stephanie Ruhle said that Kamala Harris didn’t need to tell us who she was because we already know who Donald Trump is. She then gives Kamala Harris a recorded puff piece interview and Kamala couldn’t answer the questions. Funny… pic.twitter.com/Vs6ybVAAA8

— charmane harbert ✝️ 🇺🇸 (@callme_Chari) September 26, 2024

Perhaps that’s why -beyond the entrenchment of collective ADHD as the infotainment TikTok generation rises- we aren’t getting the nuanced debate about massively important issues that we should be, even as the 2024 election appears increasingly Manichean.

All I can say to markets is when faced with a binary choice, one of which could mean status quo ante or big changes, and the other implying staggering changes, it might be worth asking if this is just another US election cycle, yadda-yadda, or if it requires a few more questions to be asked. Not to one political side, but to both. And to oneself, about one’s own balance sheet.

For now, the march higher in gold prices is doing a lot of the questioning, and talking, for us.

Meanwhile, if markets don’t have time to consider the full scale of what this presidential election could bring in 2025, they certainly don’t have time to consider geopolitics. Let me let you into a little secret: geopolitics doesn’t go away even if the Fed cuts another 50bps! Shocking, I know.

As one key example, that worrying US East Coast port strike is days away from happening, bringing logistics chaos, shortages, and inflation. For what it’s worth, online betting markets were last showing around a 95% chance that this strike happens. One would think financial markets would notice that kind of price action. But why bother, right? Just wait for it to happen and then write about it.
As another example, it was just reported that multiple sources are now saying Iran has acted as middleman to broker a deal for Russia to supply the Houthis with advanced anti-ship missiles with a 300km range and hypersonic speed. Were this to transpire, the current crisis in the Red Sea and Suez would get exponentially worse: more chaos, more shortages, more inflation. And, joining dots, if this is the low-cost Russian strategy to disrupt the Western economy, over time, why would such missiles not make their way to pro-Russian militias on the east and west coasts of Africa? Then all commercial shipping from Asia to Europe trying to avoid the Red Sea would be a target. Again, why bother emergency planning for this when one can talk about another 50bps Fed cut?
As a third example, the White House and France are proposing a three-week ceasefire between Israel and Hezbollah, to which Israel has already agreed in principle. However, it is making it 100% clear that at the end of the period Hezbollah stops all military activity and withdraws from South Lebanon in line with UN resolution 1701, which Hezbollah, and UN observers on the ground ignore, or else it reverts to systematically destroying the militia by air. Indeed, Israel is beginning preparations for a ground operation, though this is more likely aimed at forcing a diplomatic solution for now. The problem is that Hezbollah is unlikely to comply.

That points to the larger Middle East war we have been presenting as a logical fat tail risk since October 7. Obviously, this would involve Israel and Hezbollah. There is regional chatter that after Iran-backed Iraqi militias just fired another missile at Israel, Iraqi oil facilities could perhaps be targeted. Moreover, the strategic logic, if not the immediate political dynamic, would be for Israel to target Iranian oil facilities, removing their ability to finance the Houthis and Hezbollah, and perhaps their nuclear programme – which Iran is trying to again woo Europe with talks over.

Of course, this is not a geopolitical or energy forecast. Indeed, our secular energy forecast from Joe DeLaura and Florence Schmitt was just updated lower for good reason. But perhaps you might want to bother considering these kind of risk scenarios if you have a free moment away from dreaming of intra-meeting 50bps Fed cuts.