America’s dramatic January

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America’s dramatic January
Master Investor Magazine

Master Investor Magazine Issue 58

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The 2-3 leading contenders for the Democratic nomination for the 2020 US presidential election will emerge soon. President Trump faces impeachment against a backdrop of rising tension in the Middle East. Victor Hill, who is in America, looks on in fascination.

January blues

The January of a presidential election year is always a month when the planets of American politics align in such a way that the main themes of the impending elections are pre-figured. January 2020 is no exception.

Except that this is not only the month in which the field of Democratic challengers will narrow down to three or four contenders, but it is also the month when the incumbent president faces a trial for impeachment in the Senate – with a number of the leading Democratic contenders acting as inquisitors. Just to spice things up further, this could be the month when World War III breaks out – or so Senator Elizabeth Warren and others would have us believe.

In a few short weeks, on 03 February, the registered Democratic voters of frosty Iowa will cast their votes in the first Democratic caucus of the campaign. The next week, on 11 February, the traditionally early-voting states of New Hampshire, Nevada and South Carolina will hold their primaries. Three weeks later, on Super Tuesday (03 March), Democratic voters in five significant states (including California) will declare their verdicts. By that stage the current field of 11 or so candidates will be reduced to three at most. According to internal Democratic polling the two candidates most likely to get through to the final round are former Vice President Joe Biden and veteran left-winger Senator Bernie Sanders.

As of Thursday (09 January) morning it was still not clear exactly when the President would be hauled before the Senate for an impeachment hearing because Nancy Pelosi, the Speaker of the House of Representatives, had still not formally submitted the instruments of impeachment to her counterparts in the Senate. The reasoning for that is the subject of fevered speculation. Ms Pelosi claims that she requires information regarding how the trial will be conducted. Senator Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer are reported to be at a procedural impasse.

So we still don’t know exactly when this drama will unfold – though conventional wisdom holds that the Senate, which is controlled by the Republicans, will dismiss the initiative to unseat the president. We can be sure that Senators Elizabeth Warren (Massachusetts), Bernie Sanders (Vermont), Cory Booker (New Jersey), Amy Klobuchar (Minnesota) and Michael Bennet (Colorado) will use the drama to shore up their own presidential bids.

On Monday (06 January) John Bolton, the former Ambassador to the UN (and more recently a short-serving US National Security Advisor) let it be known that, if subpoenaed by the impeachment trial, he would provide testimony. Mr Bolton is one of the very few people who know precisely what was transacted between Mr Trump and President Volodymyr Zelensky of Ukraine. His opinion as to whether anything improper took place could prove pivotal. If he provides testimony against the president, then Mr Trump himself could be forced to testify. That would be sensational.

Senators act as jurors in any presidential impeachment trial. The five Democratic hopefuls in the Senate will have to take time away from the 2020 campaign trail to participate in an impeachment trial which could prospectively last for weeks. Representative Alexandria Ocasio-Cortez, universally known as AOC, a flag-bearer for America’s right-on left, has announced that she will represent Senator Sanders in his absence in Iowa and Nevada.

All Democratic presidential hopefuls will participate in a live TV debate next Tuesday (14 January) in Iowa. I shall have something to say about that next week.

Drones R Us

In the wee hours of 03 January (UK time) the news broke that the Trump administration had assassinated Qassem Suleimani, the commander of the foreign operations branch of the Iranian Revolutionary Guard and one of the most powerful (and sinister) figures in the Iranian theocratic regime. He reported directly to the Supreme Leader, Ayatollah Ali Khamenei, and was personally responsible for Iran’s extensive terrorist network across the Middle East and beyond.

We subsequently learnt that Suleimani was taken out in Baghdad in a US drone attack. The administration has claimed that he was about to unleash further attacks in Iraq on US service and civilian personnel. Just a week before, an American contractor was killed in Kirkuk and several US servicemen were injured, apparently as a result of the Al-Quds network which Suleimani controlled.

For those who broadly support President Trump, he has acted decisively against the terrorist central nervous system of an infernal regime that was coddled by the previous president. For those who oppose him, the lack of coherent strategy of the Trump administration (only a few months ago Mr Trump withdrew support for Iran’s major enemy, the Kurds) has now been superseded by adventurism. Senator Elizabeth (Medicare-for-all) Warren has hummed an almost Corbynite tune, characterising the president as an oafish child playing with matches in the fireworks cupboard.

Normally, the diverse wings of American politics flap together in foreign emergencies. Thus, both sides applauded President Obama’s operation to terminate the career of Osama bin Laden. This time, Mr Trump’s foreign policy initiative, whatever its underlying motives, has been politicised along partisan lines.

Everyone knew that somewhere, somehow, the Iranians would try to exact revenge (they always do). Last weekend there was a botched attempt against a US airbase near Lamu, on the northern coast of Kenya. (That could have been an opportunistic attack by Al-Shabaab, an Islamist terror network which operates in those parts.) Then, at about 17:30 Eastern Time on Tuesday we learnt that the Ayn Al-Asad US military installation in Iraq had sustained a rocket attack.

Master Investor Magazine

Master Investor Magazine Issue 58

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Almost as significant as the hail of missiles was the volley of tweets coming out of Tehran. These were subjected to exhaustive textual analysis. The Iranian foreign minister, Mr Javad Zarif, described the rocket attack as “conclusive”, suggesting that Iran was not planning any further military action.

For the leading Democratic contenders the temptation to say “I told you so” proved overwhelming. But the episode has fostered scrutiny of former Vice President Biden’s competence in the field of foreign policy. Even President Obama’s former Secretary of State for Defence, Robert Gates, suggested that Mr Biden has been wrong on every major foreign policy call since he first entered politics four decades ago. Mr Biden hit back by claiming that no one believed anything that President Trump says.

Mr Trump’s challenge is to persuade both supporters and detractors that the extra-judicial elimination of Suleimani was justified in military terms. The administration – best articulated by Secretary of State Pompeo, who has finally emerged as a figure of authority – claims that Suleimani was plotting an operation that would have cost “thousands” of American lives. Until tangible evidence of this claim emerges the Democratic peaceniks will continue to impugn the president.

Electoral coffers

It is a cliché that the outcome of US electoral contests can be anticipated according to how well a candidate’s campaign is funded. On that basis Mr Trump is already the favourite to win, come November.

The president’s re-election campaign began 2020 with more than $100 million in the bank. That amounts to nearly one third of the total funds spent by the Trump presidential campaign in 2016 when Mr Trump raised $339 million and spent $322 million, as per US federal election returns. Supposedly, Mr Trump contributed $66 million of his own money last time round.

The Trump campaign raised $46 million in Q4 2019 according to campaign manager Brad Parscale. One reason for its success, said Mr Parscale, was a backlash against the Democrat’s “sham impeachment frenzy”.

Senator Bernie Sanders’ campaign announced on 02 January that it had raised $34.5 million in Q4 2019 through 1.8 million individual donations averaging about $18 each – evidence of widespread grassroots support. That is thought to be the largest amount raised by any Democratic presidential candidate in a single quarter.

The mayor of South Bend, Indiana, Pete Buttigieg, raised $24.7 million in Q4 2019, bringing his total for the year to more than $76 million. The Buttigieg campaign received donations from 326,000 individuals. His campaign employs over 500 staffers nationwide. Mr Buttigieg’s stint as mayor came to a close on 01 January. One opinion poll puts Mr Buttigieg at the head of the pack. Mr Buttigieg, despite his unpronounceable name, is in many ways the most interesting candidate, as I shall explain next week.

Entrepreneur Andrew Yang’s campaign raised $16.5 million in the last quarter of 2016 and Representative Tulsi Gabbard (Hawaii) raised $3.4 million. Former Vice President Biden and Senator Warren have yet to release their fundraising numbers.

On Sunday, 02 February the sporting event of the year will takes place in Miami – the Super Bowl. An estimated 90 million Americans will be watching this iconic American Football match on TV. The two septuagenarian billionaires in the 2020 presidential contest – Donald Trump and latecomer Michael Bloomberg – will use the advertising slots to promote their campaigns. Each 60-second slot will reportedly cost $10 million a pop.

Financial markets: “All is well”

The New York markets have ridden out this extraordinary week thus far like a good American cocktail – shaken but not stirred. The S&P dropped temporarily on the news of the Iranian reprisals but steadied with President Trump’s “All is well” tweet. No American service personnel had been killed. By Wednesday morning, when the president addressed the nation, it seemed quite likely that there might not be a full-scale war, after all. The political brouhaha continues with renewed intensity – but the sense of relief is palpable.

The oil price firmed, but not drastically, and is down as I write to just over $59 a barrel. The dollar is steady.

***

The climate in southern Florida is most congenial at this time of year. I’m going to spend the weekend, quite literally, at the end of the highway – at Key West. I shall visit Ernest Hemmingway’s house. He blew his brains out when almost exactly the age I am now. I intend to visit a number of bars where the Master used to get hammered. I shall raise a glass (or two) in his honour.

On 30th July at 1pm we’ll be holding the next live Q&A webinar with the Master Investor himself, Jim Mellon. Please share a question for Jim below and we’ll try to answer as many as possible in the live webinar. Sign up for the webinar here.

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