End of Gridlock Webinar Slides 11-03-2016

1. Election 2016: End of Gridlock
03 November 2016
War Room

2. HiddenLevers War Room
Open Q + A
Macro Coaching
Archived webinars
CE Credit
Idea Generation
Presentation deck
AccountabilityScenario Updates

3. Market Update
Election Models + Forecasts
Impacts of 1 Party Rule
Scenario: Election 2016
Election 2016: End of Gridlock
NEW

4. HiddenLevers
MARKET UPDATE

5. Market Update
sources: HiddenLevers, Marketwatch, FA Magazine, Financial Times,
British Pound
Hits New Lows
DOL
shout out
to RIAs
Saudi $100b Tech Fund / Unicorn Contractions

6. HiddenLevers
ELECTION MODELS + FORECASTS

7. FORECAST: Gridlock is what we know
sources: HiddenLevers
Trump + GOP Congress
Trump + Dem Congress
Clinton + GOP Congress
Clinton + Split Congress
Clinton + Dem Congress
Trump + Split CongressStatus Quo
Obama
GOP 54/46
GOP 247/188
exec
senate
house
no longer
pipe dream
no longer
pipe dream

8. Electoral Vote Breakdown
Trump voters unlikely to vote for Democrats
for Senate in swing states
Result: GOP keeps House + Senate, gains
Presidency, and gets Supreme Court back
Trump win implies that he won swing states
Clinton win does not guarantee Senate or
House wins for Democrats
A moderate Clinton win makes Senate
control likely, but House is a steep climb
End of Gridlock: How does it Happen?
sources: HiddenLevers, 538.com
Democrats have to gain 30 seats to control
house – possible if Clinton wins by 10+%
Trump Wins, GOP Sweep Clinton Landslide, Dem Sweep
Trump Wins, GOP Sweep Clinton Landslide, Dem Sweep

9. FORECAST: Election Models
sources: HiddenLevers , NYTimes, FiveThirtyEight, LadBrokes
Election tending 2/3 toward Clinton win.
Polling Forecasts
LadBrokes Betting Odds
Betting odds
2/3 chance that Clinton wins
MXNPeso
TrumpWin

10. Truman defeats Dewey / 1948
British vote to quit EU / 2016
FORECASTS: Historical Upsets
sources: HiddenLevers – Brexit Chart, Business Insider
Pound –25%
FTSE +13%
S&P –12%
S&P –8%

11. HiddenLevers
IMPACTS OF ONE-PARTY RULE

12. 1 PARTY: Historical Impacts
sources: HiddenLevers, Wikipedia
Major
Accomplishments
Medicare
EPA, OSHA, China Open Door
Minimal
Minimal
Tax Reform
Minimal
Welfare Reform
Bush Tax Cuts
ACA (Obamacare)
Split Government does not guarantee gridlock
Major changes, especially social programs, occur during 1 Party rule

13. 1 PARTY: Trump Win + GOP Congress holds on
sources: HiddenLevers, DonaldJTrump.com
Large-scale tax cuts,
particularly for business
and upper income
Stated Policies Potential Impacts
Reduce illegal and
employment-based
immigration (H1B etc)
Repeal ACA
Renegotiate NAFTA and
other trade deals
Winner: Businesses, UHNW
real estate sector may get
additional benefits
Loser: US Economy, GDP
Loser: Healthcare Sector
Uncertainty hurts health stocks
Loser: Multinationals, USD
Trade barriers hurt US large caps,
USD value tarnished
Winner: US labor force
(mild GDP contraction assumed)

14. 1 PARTY: Clinton Win + Dem Sweeps Congress
sources: HiddenLevers, HillaryClinton.com
Raise minimum wage +
other pro-labor policies
Stated Policies Potential Impacts
Increase immigration via
comprehensive reform
Add public option to ACA,
stricter price controls
Raise taxes on high
incomes and close business
tax loopholes
Winner: Retail sales, low-end
consumption boost likely
Loser: Insurers, Pharma
Insurers will lose pricing power,
and pharma may see price caps
Loser: High-income earners,
businesses with foreign earnings
Loser: Domestic unskilled and
semi-skilled labor force
Loser: Restaurants, other labor-
intensive industries
Winner: US businesses, GDP

15. HiddenLevers
SCENARIO: ELECTION 2016
NEW

16. NEW SECENARIO: Election 2016
source: HiddenLevers
Long Term Impact Short Term Impact
3
months

17. Neutral: Clinton Small Win
source: HiddenLevers
Markets expect the gridlock to continue
Slight bounce
from FBI sell off
Short-lived rally
on certainty
3rd Obama term
(i.e. stalemate)

18. BAD: Clinton Landslide
source: HiddenLevers
Outsized Clinton win gives Dems House + Senate
Markets fear
high taxes +
pro labor policies
Truman 1948
Dems swept
congress
ACA keeps going,
pharma may be
reigned in
DOL fiduciary
mandate sticks

19. BAD: Trump Victory
source: HiddenLevers
Republicans control govt + inherent uncertainty
Immediate
uncertainty on
immigration
Trump
platform
2/3 GOP
boilerplate
ACA gets
repealed

20. Scenario: Election 2016
Neutral:
Clinton
Small Win
Bad:
Clinton
Landslide
Bad:
Trump
Victory
USD
-5%
S&P
-8%
USD
FLAT
S&P
-8%
USD
+2%
S&P
+3%
Markets have been
expecting this outcome, and
it perpetuates gridlock, so
that political risk of major
changes is low over the next
four years.
If Clinton wins with a larger-
than-expected margin,
Democrats could take
Congress, leaving markets in
fear of higher taxes and pro-
labor policies.
If Trump wins the election,
the GOP will likely control
Congress as well. Markets’
fear of protectionism and
populism contribute to
short-term decline.

21. End of Gridlock – Take Aways
Electoral Upsets
5-10% max draw down
Trump Victory
immigration shutdown
+
protectionism
End of Gridlock is real market risk,
not Clinton v Trump
Clinton Landslide
higher taxes, pro labor policies