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A future US President Clinton or Trump will need to appoint someone to handle economics as neither has any experience in this vital field, says Robeco Chief Economist Léon Cornelissen.
And it raises the intriguing prospect of a return to high office of former US President Bill Clinton if his wife Hillary wins the presidential election on 8 November as expected, Cornelissen says.
On 8 June, Hillary Clinton won the Democratic Party nomination to run for President, while Donald Trump had earlier secured the Republican Party ticket. On 8 June, Hillary Clinton won enough delegates to be able to secure the Democratic Party nomination to run for President, while Donald Trump had earlier won enough delegates to likewise be able to claim the Republican Party ticket. Both still need to be confirmed at their respective party conventions in July.
The election for what many view is the most powerful person in the world is already historic. Clinton, a former First Lady, federal Senator and Secretary of State, would become the first woman president in US history, while the real estate tycoon Trump would be the first non-politician. Their vice-presidential running mates have yet to be chosen.
Cornelissen says that while Clinton is the favorite to win, her main drawback is a lack of an economics background, leading to speculation that she would appoint her husband, former President Bill Clinton, to some sort of role. Trump, likewise, doesn’t have an economics background and has never held political office.
“The main problem with Clinton is that she can’t really claim competence in economic policy and may have a role for Bill, because the US economy did well in the second term of his presidency (1997-2001),” says Cornelissen. “She’s been promoting him as an economic czar knowing that she can’t claim any credit for the current economic upturn under President Obama.”
‘Clinton would probably tilt towards the left’
“She may also choose someone with economics expertise as her vice president. Clinton is a pragmatist, and would probably tilt somewhat more to the left. We would probably see some fiscal stimulus, but nothing exaggerated.”
Cornelissen says Clinton also lacks a clear vision, either for the US economy or its future role in the world. “What many voters want to know is – what does she stand for?” he says. “There is a lot of uncertainty about what she actually believes in, economically or otherwise. Some are saying that she lacks a positive agenda, though she still has time to formulate one.”
“We know what Obama likes doing, and what he believes in, but because of Clinton’s long establishment career, she is seen as a professional politician who doesn’t put her cards on the table. People admire her tenacity, but some see her as being a bit opportunistic. She is not as well liked as the anti-establishment Trump in this regard.”
However, Cornelissen says that Trump would also need to appoint someone with knowledge of economics, and his current pronouncements about a major issue facing the US – its giant USD 19 trillion national debt – along with trade protectionism are worrisome.
“Businessmen don’t make good economic policy as a rule,” he says. “The argument that he would restructure US debt and throw into doubt the US credit rating is unheard of. If he did, the true risk-free status of US Treasuries as a global benchmark would collapse, so it’s unthinkable that it would happen.”
‘The climate for free trade currently isn’t that good in America’
Cornelissen fears that either president may pursue a more protectionist agenda than has been followed by Obama. “The climate for free trade currently isn’t that good in America,” he says. “Protectionism is probably a vote winner, and Clinton has distanced herself from the Transatlantic Trade and Investment Partnership (TTIP). Nevertheless, I would say the general trend would be for her not to push in an altogether not-too-protectionist agenda. She needs a positive economic agenda and explain what she would do as president.”
“For Trump of course it’s a totally different matter – he isn’t very detailed in his policy proposals, but of course his anti-Chinese rhetoric, threatening Chinese trade with huge import levies, doesn’t bode too well. The idea of building a Mexican wall and the temporary prohibition of Moslems from coming into the country also isn’t very trade friendly.”
With the presidential nominees now decided, attention will turn to who each candidate will pick as their potential vice-president. Possible running mates for Clinton include Ohio Senator Sherrod Brown, Massachusetts Senator Elizabeth Warren or the Department of Labor Secretary Tom Perez, who is of Hispanic origin. She is seen as being unlikely to pick Bernie Sanders, the Vermont Senator who she beat for the Democratic nomination.
“It will be interesting to see who Clinton chooses as a running mate,” says Cornelissen. “Some think that Warren could unite the Democratic Party by tilting to the left and to cover the Sanders flank. What would make this combination very interesting and probably unbeatable is that it’s an all-female cast against Trump. Warren as a vice-president probably wouldn’t be very friendly towards Wall Street though, as she has been very critical of it, so there could be some unease there.”
For Trump, possible running mates include Iowa Senator Joni Ernst, Tennessee Senator Bob Corker and New Jersey Governor Chris Christie. “The choice of a running mate for Trump is also interesting because it would be sensible for him to choose a woman, but which one would be prepared to run with him?” asks Cornelissen. “It would be sensible if he picks someone with political experience, but it would be a huge career risk for a politician to jump on the Trump ticket at the moment. It will be difficult for him.”
Cornelissen also says investors should bear in mind that control of the US Congress may also change on 8 November. Aside from the Presidential election, the entire House of Representatives and one-third of the Senate will be elected. The Republicans currently control both the House of Representatives (246-188) and the Senate (56-44).
“So the question is, if Trump does become president, can he push his agenda through Congress?” says Cornelissen. “There you can have huge doubts, especially if there is a Democratic majority in the Senate, which means the stalemate will go on. You could worry about the rhetoric but in practice there are checks and balances.”