Listen to the full episode, here.
John Norris (00:30):
Well, hello again everybody. This is John Norris at Trading Perspectives. As always, we have our good friend Sam Clement. Sam, say hello
Sam Clement (00:36):
John. How are you doing,
John Norris (00:37):
Sam, I’m doing fantastically. Do you know who’s not doing fantastically?
Sam Clement (00:41):
I got a few guesses.
John Norris (00:43):
I would say anyone that was voting or betting on Joe Biden winning the presidency in November,
Sam Clement (00:48):
Joe Biden himself.
John Norris (00:49):
Yes. Probably not doing so well. Obviously as the world would know, I mean I think you’d have to be a shepherd in Chad or some such place and that’s an allusion to something from David Beckham, but you have to be a Shepherd in Chad to not know that Joe Biden officially dropped out of the race and after that, pretty much all the Democratic delegates, at least unofficially swapped their support to Kamala Harris, current vice president, to be the new Democratic nominee. But I guess they’re still going to have to go through all the parliamentary procedure at the upcoming convention in Chicago. I mean, Sam, am I right or wrong? I don’t know.
Sam Clement (01:24):
You’re right, and it’s something, no one’s technically voted for her, no individuals in the primary, but she seems to be the nominee. I mean, she has enough delegates I think at this point. It’s just kind of a procedural thing.
John Norris (01:40):
Well, let me ask you this one, just because someone says that they will vote for Kamala Harris since she was not elected, are they legally obligated to vote for her until they get to the convention floor? I mean there’s just so many questions I really don’t know. Part of that is the reason why I think our unofficially official posture here at the Investment Committee of Oakworth Capital Bank is in terms of this sudden turn of event’s impact on the markets and the economy, it’s still too early to tell. While Kamala Harris will undoubtedly be the democratic nominee for the presidency, she is not I think legally or officially yet. They do have to go through the conventional net. And also even perhaps arguably to me even more important than that, we don’t know what the democratic platform’s going to look like coming out of this convention. Now that the pretense (pretence its a strong word) but now that the pretense of moderate Joe Biden kind of heading the ticket up…
Sam Clement (02:43):
Pretense is a carrying a lot of weight there…
John Norris (02:47):
All that sort of stuff. Perhaps I shouldn’t have said it like that, but without Joe Biden there, does the party shift further left? And as a result, our position is: we don’t legally know who the nominee is going to be, nor do we know what the party platform’s going to be. As a result, it’s very difficult for us to have a prediction or make any concrete comments on exactly how the election, I mean the campaign, is going to impact the markets until November until we get finished with this.
Sam Clement (03:20):
Yeah, look, she is going to change. I mean she is that idea of what Joe Biden’s policies were. She is further left of those and Yougov, I think it was, had her as when she was still the senator, as I think the most liberal based on…
John Norris (03:36):
I couldn’t find that anywhere, Sam!
Sam Clement (03:37):
Yeah, it was taken off. But she was pretty far left in a lot of policies and we always say the president gets too much credit in the good and blaming the bad, and that’s pretty undoubtedly true.
John Norris (03:52):
It’s not always true, but almost always true.
Sam Clement (03:54):
At least there’s at least some credit or blame elsewhere, whether it’s Congress or whether it’s just strong consumers or the Federal Reserve or some exogenous event.
John Norris (04:07):
Politicians get too much credit for the good time, too much blame for the bad time.
Sam Clement (04:09):
Right, especially the president. But with that being said, there’s still some credit and blame that goes towards the President. So it is important saying that, and it is true – they get too much credit, they get too much blame – that doesn’t mean they aren’t impactful to the markets. And I think that’s what I’m getting at is her policies are going to change. She’s talked about people in positions of power in the administration that are probably not going to be there if she was to get elected. So things are going to change whether it’s what we do with defense, whether it’s the treasury, whether it’s Secretary of State, what have you, things are going to change. And you’re right, it’s just too early to know what that’s going to be, how that’s going to impact what Congress is going to look like to determine what can get passed. I mean, it could all be a moot point.
John Norris (05:01):
I mean, there’s so many questions, very few answers right now. Anything that we say from, I mean really in this podcast and more importantly is we have more political about this in just a second. Anything that Sam and I say here today, really just our opinions only and not necessarily the opinions of Oakworth Capital Bank and certainly not the official position of Oakworth Capital Bank, its directors, shareholders, stakeholders, anything like that. So it’s just please understand that. So when I’m taking a look at Vice President Harris versus a Donald Trump, what I’m seeing is this could be a pretty tight race. I think a lot of people were going to say, Hey, Trump’s got this in the bag after almost getting shot or not almost getting shot, getting shot, almost getting killed. And now people say, oh, he’s going to run away with it. I didn’t subscribe to that at all.
Sam Clement (05:56):
It was too far away from voting and how short minded people are…
John Norris (05:57):
Well, it’s too far away from voting and it’s just also, it’s still Donald Trump. I mean, everyone knows Donald Trump and knows what kind of person he has been in the past and probably what type of person he’s going to be in the future. He’s already been president once, so I don’t know if that necessarily is going to change that undecided voter and I don’t think there are any undecided voters when it comes to Donald Trump. I think it’s really just, I mean round two with Joe Biden is just like, okay, do I vote for Biden just so I can not vote for Trump or what have you? All right. And the first debate was so bad that I think that’s where maybe people got sort of like, uggggg. It’s Trump’s now. I mean that sealed the deal and all that stuff. Now Harris is in the race, Biden’s not in the race and I feel from the headlines from traditional media outlets all of a sudden, hey, it’s a different ballgame now. It’s a different race. This is going to be potentially much closer than what we thought a week or two ago.
Sam Clement (06:58):
Yeah, it’s going to be closer. I still think it’s going to rely on a couple states like it tends to each election now probably Wisconsin,
John Norris (07:05):
Michigan,
Sam Clement (07:06):
Wisconsin, Michigan and Pennsylvania, if I had to guess, or the states that could….
John Norris (07:11):
California?
Sam Clement (07:12):
Probably not.
John Norris (07:13):
Not Alabama?
Sam Clement (07:14):
Probably not. You never know. So I do think it makes it closer. Some swing states, it’s still just so early. This was such a rapid change. I mean, we’ve talked about it since the debate, a lot of people said it’s a when-not-if kind of thing, they were going to replace him and some pushback on that, but nonetheless it happened. But we’re just a few months away.
John Norris (07:37):
Which all seems mighty curious, but we’re not going to go into that.
Sam Clement (07:40):
But it’s a few months away from when people are voting. So these polls… there’s going to be a lot that comes out. The focus has been on her for a few days really, or a week or two at most.
John Norris (07:51):
Well, I would tell you that the initial indications are that Harris has helped to shore up what might’ve been some faltering support in the African-American community. Trump seemed to have been gaining some ground over where he polled in 2020, and apparently from what I’ve seen thus far, it’s been too early to make a determinant conclusion on it. Harris is helping that out. And I do think that her being a woman of mixed ethnicity, I think part black, part South Asian, and then also being a female… for people who base their votes solely on identity politics, then that’s or identification, or demographics, that certainly should shore up those constituencies. However, I don’t think that’s necessarily going to be what takes the Democrats over the edge here. Traditionally, all of those groups, which Kamala Harris represents, have always been very left-leaning anyhow. No one thought that Donald Trump was all of a sudden going to win the majority of the African-American vote. No one thought that all of a sudden Donald Trump was going to win the majority of the Asian vote. He wasn’t going to, all they were thinking is maybe pick up a few percentage points. I think what I’m most interested in seeing is actually the convention itself, and normally I could care a fig about political conventions. I mean, I just don’t care. However, I’ll be interested to see just how far left the party platform goes this time. That it’s going to go further left, I think is without debate.
(09:40):
Just how far left it goes in some of its economic policies, in particular, is going to be really, I think the key issue here. Because in 2020, there were a lot of people that truly just voted against Trump. Absolutely, truly voted against Trump, thought Biden was almost this grandfather fellow that would keep the far left at bay, off the platform, and keep the Democrats…
Sam Clement (10:10):
It kind of felt like a known entity,
John Norris (10:11):
Known entity and what have you. However, if it is a Harris who has traditionally been viewed as very liberal, and if the platform is increasingly liberal, Bernie Sanders-type liberal, is that going to turn off that suburban college educated, frankly that Caucasian, white, whatever I’m supposed to say these days, soccer mom or professional that voted against Trump. If they move so far left, that person just goes ooomph, I’m not going to vote for Trump, but I’m also not going to vote for this either, and I’m just going to leave the President blank when I go vote. To me, that’s what I think is the real question coming out of this Convention.
Sam Clement (10:51):
And I think the convention’s important, but the other piece is just that the focus has not been on her until very recently.
(11:02):
She was an afterthought in the political conversation.
John Norris (11:05):
Sam, she has been the most invisible vice president since Dan Quail. I mean, that’s my personal opinion. That’s why I threw that caveat out there. But she was virtually invisible. I mean, for all intents and purposes.
Sam Clement (11:17):
And she didn’t do great in the 2020 primaries. Focus was obviously more on her at that time. So I just think it’s so interesting, this short timeline and the Republican party’s going to hammer home her policies and the focus on her and gaffes and what have you. So I think a lot is going to change. I think the polls are going to change. People are going to… they’re just learning all over again. It’s kind starting over a little bit.
John Norris (11:50):
It is starting over and it’s starting over really with almost a clean sheet of paper on the Democrat side because now they don’t have that figurehead and a Joe Biden that will project some measure of moderateness or middle of the aisle and what have you. And while he certainly didn’t move what he promised in terms of unifying the country, quite the opposite, there was still that belief at that time that he might potentially be able to do so.
Sam Clement (12:19):
It felt like continuity, in a sense. It’s been since 1976 that there wasn’t a Biden, Clinton or Bush on a ticket.
John Norris (12:28):
Well, there you go. And so there was some measure of comfort with Joe Biden. There’s not that same measure of comfort with Vice President Harris, in my estimation. Then on the other side of the ticket, and just my opinion only, I’m not sure if Donald Trump could have chosen a worse candidate or vice president.
Sam Clement (12:48):
I’m not sure what it gets him.
John Norris (12:50):
I’m not sure what it gets him. And anyone that’s sober-minded, I would love to debate you on that if you feel otherwise. But you take a look at it, I mean, okay, it shores up the very right wing white portion of the electorate, which I hate to tell you, Donald, you already have.
Sam Clement (13:07):
Look, typically the vice president is chosen for a reason. There’s some strategy behind it, whether it’s a demographic you don’t normally get, whether it’s – you know, Obama chose Biden, at least partially due to this consistency. I’m this young up and coming….
John Norris (13:23):
Well, I mean truthfully, it was to offstage any persistent or lingering racist fears in the country that we were electing our first, I mean black, African-American, I mean truly African-American. Obama’s father is from Kenya, offsetting any sort of true racist fears – Barack’s here, but old Joe from Scranton is going to be here as well.
Sam Clement (13:48):
But no matter what, there’s always a reason typically for why you choose the vice president. And it’s not typically just a policy thing. Trump chose Pence for the more traditional conservatives, I would say. So I just don’t know what box that check set. Most of those people were kind of already voting for him.
John Norris (14:10):
I would say everyone that would’ve been voting for Vance would’ve been voting for Trump anyhow, which does take us to going back to the convention, not only the platform, but who, if it is Kamala Harris and 99.9% sure it’s going to be, if it is Harris who is going to be her running mate?
Sam Clement (14:30):
I think it’s probably Governor Shapiro out of Pennsylvania.
John Norris (14:35):
And you see that would be a very wise choice. In a lot of ways.
Sam Clement (14:39):
It checks boxes. But I think it creates some problems of how you answer this because Israel and Palestine has become one of the issues for a lot of the left. They are pretty opposite in terms of their stance on that. Shapiro is pretty, pro-Israel. I mean, he’s up there with Federman as one of the top Democrats in terms of pro-Israel.
John Norris (15:05):
But the reason why Shapiro is a great call is because he’s a governor of his swing state. Clearly. Pennsylvania. He is a more moderate Democrat, which will give people some measure of comfort, and I think he helps to even out the ticket. And that could be for Republicans, that could be your biggest nightmare.
Sam Clement (15:24):
I agree. And we said that’s one of the big states.
John Norris (15:26):
And so that could be the biggest nightmare having Shapiro be the vice president.
Sam Clement (15:30):
It could be Roy Cooper, the governor from North Carolina. There’s been talk of that. There’s been talk of, what’s his name in Kentucky? Beshear.
John Norris (15:40):
Beshear. Yeah.
Sam Clement (15:42):
I think that’s the direction, possibly a Mark Kelly out of Arizona. Who knows? But I would say it’s probably one of those four.
John Norris (15:52):
Well, if it is a Shapiro that would just, or Beshear or even a Cooper just go to show you that the Democrats are trying to win.
(16:05):
They’re trying to win. And if it does happen to be one of those, they will win or could stand a very real chance of winning. I will tell you this, and this is my opinion, only. If they get someone who is even further to the left than those people like a Gavin Newsom or what have you, a very polarizing person that will be enough really to send Trump back to four more years.
Sam Clement (16:26):
Yeah.
John Norris (16:27):
Again, my opinion.
Sam Clement (16:28):
It’ll be interesting with these – basically we’re starting over with debates. I mean as important as that one was, and really that was probably the driver to get Biden off the ticket, his gaffes and what have you. It almost doesn’t matter anymore. That debate. I mean the one takeaway from it was that Biden is probably not capable for four more years, or at least got the Democratic party to kind of get on board with it.
John Norris (16:56):
Yes. I would tell you debates are still very important. I would tell you that debates with Donald Trump being one of them, probably not all that important. He is such a polarizing person that you’re either going to vote for him or vote against him and probably not real interested or curious to hear exactly what his policy positions are. I don’t know that many people that after his time in the limelight or spotlight don’t have an opinion on him one way or the other. And so to go through his platform probably isn’t going to persuade someone to vote for him. I think with the debates with Trump, it was just frankly kind of morbidly so – how bad would Joe Biden do, and would he do so badly that people wouldn’t be willing to check the box, I mean, go vote for him just to vote against Trump. That’s my personal opinion.
Sam Clement (17:57):
So now he’s gone.
John Norris (17:58):
Now he’s gone.
Sam Clement (17:59):
It’s a clean slate.
John Norris (18:01):
It’s a clean slate. And again,
Sam Clement (18:02):
Like that debate doesn’t matter as much because the one action people took from it has happened. We’re done with that. We’re moving on.
John Norris (18:10):
But if the party platforms things like what Biden’s been almost secretly proposing: rent ceilings,
Sam Clement (18:19):
Yeah, that works out well.
John Norris (18:19):
Those never work out. I know they’re short term popular and whatnot. Whenever you have a price ceiling on anything, it will lead to a shortage. This is just Econ 101. It’s not a question of if it’s a win and it’s a guarantee. You put a ceiling on rent, people love you for a short period of time when all of a sudden they aren’t getting their pipes fixed. The place didn’t getting a new coat of paint and the rent rent keeps going up 10% and new inventory doesn’t come online, any of it. It’s a mess. Just don’t buy into that. But then also kind of secretly they’re pushing for a sharp increase in the capital gains tax for all intents and purposes, taking it to basically where marginal tax or income tax rates are. And Sam, you know how much I hate the capital gains tax. It is a capital control. It inhibits the free flow of capital across the financial system and keeps it from going to its highest and best use as a result,
Sam Clement (19:21):
It acts like a ceiling.
John Norris (19:22):
It acts like a ceiling. It freezes up. It acts like a ceiling on economic activity as people sit in stock that their granddaddy left them or what have you, and don’t go and don’t sell the money and move it into something else. Either they consume it or invest into something else and… and let’s get rid of these things. And the quickest way to distribute wealth throughout the society is to get rid of the estate tax.
Sam Clement (19:45):
It gets locked up in trusts that are meant to pass on for 10 generations.
John Norris (19:50):
Without a doubt.
Sam Clement (19:51):
And never be spent.
John Norris (19:52):
You have all these dynasty trusts and all that stuff. It just keeps the rich richer for a long period of time. Get that money out there and be disseminated more readily. And so when I hear Joe Biden talking about cutting, getting rid of Trump’s tax cuts and schemes that are due to expire at the end of 2025, I’m going, that’s not going to work. We need to get all that money disseminated, want those things extended, if not completely – the estate tax eliminated. Also, don’t want to see the capital gain tax, also don’t want to see these rent controls. However, those are things that the average American probably doesn’t care too much about. I mean, obviously that helps start a bank and a wealth management shop and chief economist, chief investment officer get a little bit more granular on that type of stuff. It’s when we start talking about economic policies that really do hit the middle class right square in the middle of the eyes where all of a sudden they’re going: that’s going to screw me because of how left-leaning it is.
John Norris (20:56):
That’s when all of a sudden, I think this really opens up to a very interesting discussion.
Sam Clement (21:03):
I agree completely.
(21:04):
So Sam, we’ve got a little ways yet until the election. We’ve got the Democratic conventions coming fast upon us. I’ll be watching a lot more of that than I watched at the Republican convention because I didn’t watch a single second the Republican Convention. So any of the Democratic convention that I watch will be more than the Republican convention. And it’ll be real interesting to see not only who the vice president nominee is going to be, but not just if it goes left, but just how far left the Democratic Party’s platform is. But more particularly on economic issues. I think we are truly at an inflection point and our nation’s economic history, whether or not we want to be far more, not necessarily socialists, but far more government controlled or far more private-sector controlled.
(21:55):
And we are at that inflection point. I’ll just tell you, the more controlled you give the government over the economy, by definition, the smaller the private sector becomes, and when the private sector becomes smaller, that’s bad news, if you think the private sector is a better generator of wealth than the public sector, which I happen to agree with. So real, very real, very real stakes here. So let’s see how it all shakes out. Hopefully it’s not that worst-case scenario. Hopefully we will be able to have somewhat peaceful campaigning, less divisive campaigning, and hopefully we will have two legitimate options for political party platforms by the time we get to November.
Sam Clement (22:42):
I agree.
(22:43):
Alright, with that guys, we always love to hear from you. Also, if you have any comments or questions, please by all means, drop us a line.
(22:50):
You can always email us at or you can leave us or review on the podcast outlet of your choice. If you’re interested in reading more or hearing more of what we got to say or how we think, you can always go to oakworth.com and take a look underneath the Thought Leadership tab for links to all kinds of exciting information, including links to previous Trading Perspective podcasts, links to our blog/ newsletter Common Cents, and coming out really maybe today, maybe tomorrow, no later than middle of next week, our quarterly analysis called Macro & Market, which is particularly awesome this quarter. That’ll be coming out and you can get links to that as well. So that, Sam, anything else on this hot topic?
Sam Clement (23:50)
That’s all I got.
That’s all I’ve got today too. Y’all take care.
Transcript by Rev.com