This post is opinion only. See full disclaimer below.
The Chinese have a famous curse which is “may you live in interesting times.” We are certainly living in interesting times so to speak and wherever you fall on the political spectrum there is much certainly to be fearful of potentially occurring over the next few years. Ever since Hegel’s owl of minerva flew over Napoleon with his people’s army the modern world has hinged on the ability of elites to enlist the masses to their various causes. In Tammany Hall fashion Mamdani has seized control of the New York political apparatus in the name at least in part of new immigrant groups in NYC, much as the Irish immigrants did so many years ago. Some observers might even be slightly surprised it took so long for this to occur given the demographic changes of the last several decades. This occurs though in the context of two elite cliques the Trumpist’s and the Globalist’s fighting tooth and nail for power over the US ship of state. Its no accident that Mamdani’s biggest backer was the Soros contingent–the main rival to Trump. When power elites fight and they fully bring in the masses times can get interesting indeed.
Now on this site we are 100 per cent politically neutral. Not that we do not have our partisan biases and definite beliefs, but the goal here is to stay neutral and simply point out the factuals and counterfactuals as best we can. So lets run through some key implications initially.
First, there are those that say that the recent democratic sweep of NYC, NJ and Virginia elections does not matter, nor the gerrymandering victory in California. Those are blue states and they will not decide the house elections in one year, so the argument goes. I think the implications are deeper than that. It does suggest that perhaps Trump’s momentum is stalling. Given all the peace and tariff successes he’s had his performance should perhaps have been better. Is this a sign of things to come? Maybe. If the Republicans lose the House in 2026 all of his policies will stall which is. a big deal.Trump thrives on chaos as long as the results are great—but many middle class Americans do not and they may perceive even victories through this more specific perspective.
Second, the counterfactual is that this could actually be the last hurrah of the extreme left of the democratic party. Like what psychologists call a reaction formation the left has reacted very badly to finding all their globalist worldview increasingly thrown out. The clean energy narrative is going by the wayside given the voracious energy needs of AI—even in the EU. If the whole model is that of being part of a progressive history and that history goes astray that is deeply troubling to your identity. The result: a doubling and even tripling down on your more millenial agenda. In another lifetime I used to have dinner periodically at the faculty club on Columbia University and some of my more radical compatriots would always have the same refrain: the American people have never really had the choice of voting for a genuine radicalism. Given the choice they’d take that course. I remain skeptical–the US is not Europe, but it seems like as of right now that’s the path the Democrats are on. No more veiled Obama like radicalism, lets put it front and center and go for broke. But here’s the counterfactual which may or may not be true. The rest of America is not Brooklyn and Mamdani’s win allows the Trump administration to paint the Democrats as a bunch of extremists to middle America. Hillary Clinton after all played great in Brooklyn, but not to the same extent in the rest of America something Bill Clinton supposedly tried to warn her about to no avail or so the stories true or not go. If the vast middle class has been alarmed about political chaos this is a gift to Trump. Is this the case? Time will tell and I’ll remain neutral.
Third, NYC may or may not have a problem depending on how you look at it. Many years ago way back in 1987 I can recall being in a taxi in the city when the news came over the radio regarding the market crash of 1987. I had little skin in the game back then and I must admit at the time was even slightly gleeful at the prospects of Wall Street on the ropes and said something flip to that effect to the taxi driver. I was young and naive and he much older so he tried to educate me and said in no uncertain terms I was wrong. Last time that happened he said I lost a lot of business and all my working class friends and I all had a rough go. As he put it when Wall Street loses that bad the money stops flowing and who gets hurt the most? Not the rich with their reserves, but everyman trying to get by somehow.
The fact is that the 1 per cent richest people in NYC pay 48 per cent of the taxes, or something like that. Are they going to stay in NYC if Mamdani implements even a third of his socialist agenda? I don’t know, but if they leave and the tax base drys up the city and everyman has a big problem.In an earlier era WallStreet could not really leave NYC—that with new technology is no longer the case. Often what elites do when this occurs is redline a city. At one point Portland was one of the wealthiest cities on the West Coast. They went heavily to the left and the corporations all left. Trump has already threatened to do this from the fiscal side though he seems to be indicating he will talk to Mamdani and not take the most extreme course that would hurt NYC. Also its not yet clear Mamdani will have the Governor’s backing or the resources to enact many of his policies. If Elise Stefanik wins the governorship she will block all his plans though that still seems not yet likely in such a blue state.
Now perhaps you don’t care. Last time I checked Portland has some of the best bike paths in the country. Perhaps your attitude is let Wall Street leave. I can remember an earlier NYC where the middle class didn’t all have to commute into Manhattan and relatively cheap housing was still fairly available. But I also recall how messed up the city was lacking the resources it later got, how bad much of that housing was, and how much riskier a. place it was to live. I’m not sure the 20 and 30 somethings fully understand that. Perhaps they’d be okay with that earlier super chaotic NY or perhaps not. You sort that out, but I would be wary of the NYC real estate market right now or the assumption that big changes will only be positive—it hardly ever plays out that way in practice.
Fourth, it looks like the Supreme Court could strip the President of his tariff powers. While its too soon to know for sure its not an impossible outcome. They asked tough questions of both sides and its anybody’s guess. If it does occur it would be a huge blow to Trump’s foreign policy and a giant win for China. Trump’s “problem” is that during his first term he appointed, and the Democrats do this much less, not super partisans, but what he thought were the most qualified people.You can argue they were still highly political appointments, but there is a difference nonetheless. Trump this time around got the memo and has not chosen people who are more neutral for certain of these top positions in the same way—but the Supreme Court appointees were in that earlier more conventional mode. If they were more partisan they would easily side with Trump on this one. Believing themselves rightly or wrongly depending upon who you ask to be above the fray they still could throw out his tariff justification, it’s not impossible. This would be a huge defeat and momentum changer and call into question Trump’s entire economic agenda. Can he reconstitute the tariff regime using less broad criteria and precedent if this occurs? Yes, and contingency plans are no doubt under way—but it would be a big change. If the last period has proven anything though do not assume whatever your politics that Trump will not have a successful political strategy. He also has a lot of levers he can pull especially economic as President to still win the mid-terms, and a lot of investment is coming into the country, a fact that should not be ignored from these kinds of calculations. You should follow these events closely.
Those are some of the more important macro-political questions to a degree being overly ignored by the markets. In any case these are interesting times indeed and the future is unwritten.
Disclaimer:
The content on this blog is provided for informational, educational, and entertainment purposes only. It represents the author’s personal opinions and should not be construed as financial, legal, or tax advice.
By using this blog you agree that:
–You assume full responsibility for any outcomes resulting from the use of this content.
–You are solely responsible for all investment decisions and any gains or losses you incur.
–Past performance is not indicative of future results.
Any discussion of specific securities, sectors, or strategies is offered strictly for educational purposes and does not constitute a recommendation to buy, sell, or hold any investment. You should always:
Consult a qualified professional before making any financial decisions.
Consider multiple viewpoints and counterarguments.
Conduct your own research