Biden Leadership

Posted By Darren Winters on Nov 11, 2020

Biden Leadership

What would a Biden leadership bring to the international stage, moreover, how is it likely to impact future capital flows and portfolios moving forward?

A Biden leadership is likely to favor multilateral trade agreements, which implies the return of globalization, and the rolling back of the outgoing Trump administration’s nationalistic agenda of bilateral trade agreements

So, a Biden leadership will strengthen multilateral trade, putting globalism back on the path, and that is likely to benefit large capitalized companies that derive a large portion of their revenue from international trade. 

Companies and economies actively exposed to the global economy could outperform under a Biden leadership

International cargo, sea, and air, are likely to benefit from a pro multilateral trade US administration. 

A Biden leadership is likely to roll back the former Trump administration-inspired trade war with China and Europe

Biden Leadership

While most media attention focused on the US-China trade war, the US trade war with Europe, which got less coverage, was worsening.

A commercial storm was building over the Atlantic from autos to chocolates to champagne as the trade spat between Europe and the US worsened. Back in June, Forbes wrote a piece, US-Europe Trade War Worsens, Could Trump Defeat Change That?

With a Biden leadership will favor, multilateral trade agreements the EU, super state trading bloc is likely to better perform under a Biden administration, particularly the major EU exporting countries. 

Whether a Biden leadership will make the UK administration decide to backpedal Brexit remains to be seen

With Trump’s bilateral trade agreement agenda now off the global stage, the UK Brexit agenda is without the US, which could pressure the UK’s BoJ government to water down, or maybe even ditch Brexit altogether. 

Could the GBP rally against the USD be telling a backpedal Brexit story?

A Biden leadership, with non-bilateral America’s first agenda, could also be softening the USD

So, a weaker USD would be a tailwind for US export-driven companies again that would be the large capitalized corporations connected to the global economy. Emerging economies would also benefit from a softer USD as it would make servicing US dollar-denominated loans less expensive. 

A Biden leadership with his favored “liberal internationalist” agenda on the world stage is where things become more complex to understand for investors

Paradoxically, Trump’s hawkish persona was the opposite in terms of his foreign policy. 

What many who wrongly believed would be the war president, including me, actually, turnout to be against intervention. 

The withdraw of American troops from Syria and Afghanistan under the Trump administration underscores the above. Trump was nominated for the Nobel Peace Prize.

Christian Tybring-Gjedde told Fox News in September, “For his merit, I think he has done more trying to create peace between nations than most other peace prize nominees”. 

Christian Tybring-Gjedde, described a far-right Norwegian, the politician added that he was not a Trump supporter. “The committee should look at the facts and judge him on the facts – not on the way he behaves sometimes” he said. 

Moreover, Trump’s peace plan vowed to stop endless wars in the middle east. The Trump administration promised to keep Jerusalem as Israel’s undivided capital. The US will recognize Israeli sovereignty over territory that Trump’s plan envisages being part of Israel. So, Trump’s pro-Israel foreign policy believed that peace would only be achieved, in the region by creating a greater Israel, a dominant force in the middle east, which also entailed preventing Iran from obtaining nuclear weapons. 

“Iran will never have a nuclear weapon!” the president twittered in capital letters back in January. 

A year earlier Iran’s top general Hossein Salami said, “This sinister regime must be wiped off the map and this is no longer … a dream (but) it is an achievable goal.”

Iranian general Salami was later assassinated by a US drone in early January 2020, and there was relative peace in the middle east.

Here is the takeaway point about Biden’s leadership

Biden will not be so pro-Israel and who knows maybe a Biden administration will wrongly believe that peace in the middle east can be achieved through the balance of power with Iran developing nuclear weapons. The rationale being that if the doctrine of mutually assured destruction (MAD) after WWII fostered a climate of no war between the East and the West, then maybe MAD will work for the middle east too. But this would be a huge foreign policy error for peace, as it will force Israel to attack Iran, believing that its very existence will be threatened if it doesn’t act to stop Iran from developing nukes. 

A less pro zionist US Biden leadership could preempt years of war between Israel and Iran, which is what will wag the tail of the military-industrial complex MIC

To keep the cash tills ringing, MIC needs a local conflict that drags on and on. 

Biden is no dove, as vice president, he has backed every military conflict under Obama. 

The untold story about Biden leadership is that it could lead to war in the middle east

If so, that would be bullish for defense stocks.

Moreover, conflict in the middle east keeps crude oil prices higher at a time of waning demand due to the global economic recession. 

Other factors of Biden’s leadership to consider is that his administration would endorse the World Health Organisation and the Paris Climate Agreement. 

Biden leadership would also return to the Joint Comprehensive Plan of Action (JCPOA), and that will be good for NATO, again defense stocks.

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