Yes, I know. You might be puzzled by the outcome of the US election, even more so by the market reaction to it. A few weeks before the election, based on the now-discredited-forever polls advocating for a blue wave, everything was about the “reflation trade”. According to the latter, huge spending would push up inflation, which would push stocks altogether. The worst-case scenario was the absence of a clear-cut vote, which would lead the market to crash with uncertainty.
Even 2 days after the votes, we still didn’t have any clue who the president could be, and the US stood as divided as ever. Yet, the market was buying stocks hand over fist. Why? In short, when you don’t know what the future is made of, let’s rely on the past as a guide. What the past 10 years tell you is that there is only ONE trade in town: buy US tech stocks, period.
The only thing standing in the way of the over-arching power of tech was potential antitrust lawsuits. Due to a split Senate and House, it is less likely to happen in a meaningful way. The same way it is less likely to have deep restructuring of any sort in healthcare or energy. A sad thing for US long-term competitiveness, and the Western world at that, but a great thing for short-termism.
Playing the devil’s advocate, there might be something good in letting tech companies wreak havoc in the economy. If history is a judge, they’ve been lowering cost for consumers, employing their fair share, and disrupting long-outdated models. Tech has almost levelled down the playing field for smaller companies to have a boot-strapping go at their ideas. The only reproach we have is almost philosophical: how do we make sure they continue to use such huge power for good?
Answer is, by allowing consensus-built services through blockchain, a piece of technology where all processes should converge. Ten years from now, blockchain would disintermediate all services, trimming further costs and bias. More importantly, people should be able to vote for the outcome they desire, in a swift, efficient, and safe way. The status quo is probably not so bad after all.
360 Advisory – Markets