Yes, I know that the presidential election of 2016 is another two years off. But if you already know the outcome of that contest you can use it to your advantage trading the markets today.

You don?t want to get caught out like many conservatives did in 2012, who were forced to dump stock in a hurry to beat a surprise jump in capital gains taxes after an unexpected Obama win, triggering a 10% market correction.

By the way, that was the last 10% correction we got. It has been straight up from there.

If you have any doubt that Hillary Clinton will be the slam-dunk winner in 2016, take a look at the table below. According to a poll conducted by Quinnpiac University in New Haven, Connecticut, the former Secretary of State beats every Republic front-runner in the key battleground states of Florida and Ohio, often by huge margins.

Notice that the more conservative the candidate, the bigger the losing margin. I have always believed that the United States is a fundamentally moderate, middle of the road country.

Whenever either party leans towards extremes, they are sent to the woodshed, where they are punished severely by the voters. At the end of the day, most Americans just wish that the government would go away.

In another poll I saw Clinton is leading by 60%-40% with Republican women. Democrats are counting on many to cross party lines to vote for the first woman president, as they did for the first black one in 2008. Most other leading, non-partisan polls are reaching the same conclusion.

You can forget about Senator Ted Cruz from Texas because he was born in Canada, with a Canadian father. After carping about Obama being from Kenya for eight years, the last thing the Republicans will do is run another foreigner for president.

So what will President Hillary mean for the market? There?s no point in asking her. Officially, she is not even running yet. She is on the lecture circuit now earning $225,000 a pop. But I have been in touch with some of her recent and past staff people, and the answer seems to be not much.

With our Middle Eastern wars done, Al Qaida a distant memory, the economy going great guns, unemployment down, and the US energy independent, Clinton should inherit a country that is in pretty good shape.

With the economy reaccelerating back to a 3%-4% growth rate, and no new wars, the budget should be close to balancing. The dollar will be endemically strong.

We should be at the threshold of a Pax Americana. In these goldilocks conditions stock portfolios should rise by 10% a year, and 13% with dividends, and inflation will stay under control. Bonds will slowly grind down and interest rates up, but no by much. That works for me.

So, social issues will be the top legislative priority. You can expect to hear a lot about gun control. Assault rifles, especially military ones like the AR-15, and high capacity magazines will become history. You can also count on federal restrictions on the resale of firearms and closer tracking of convicted criminals.

Immigration will be another hot button item. Expect measures to permit the 10 million illegals currently in the country to gain access to citizenship, subject to strict conditions. This is the umpteenth time we have done this in my lifetime.

Clinton will also make an effort to roll back restrictions on voter?s rights now rampant in red states. Ten-hour lines to vote in black neighborhoods in Miami should become a thing of the past. The same will hold true for state restrictions on abortion, such as mandatory ultrasounds.

President Obama did the heavy lifting with financial regulation through Dodd-Frank and with health care in the Affordable Care Act. It will be up to Hillary to implement and enforce existing law, a far easier task. Who knows? The website might even be working by 2016?

The same will be true with tax reform. Obama delivered the big hit when the federal income tax rate jumped from 35% to 39.50%. Clinton will probably only nibble at the edges. It will be hands off for the middle class.

Target number one: the ?carried interest? treatment that assures that most hedge fund managers, like me, pay no more than a 15% annual rate. Capital gains could also see another 5% move.

But with the federal budget balancing, there shouldn?t be any need to raise taxes, unless you want to pay off the $17.5 trillion national debt faster. In any case, that will happen by 2030 under current law, and with improved growth outlook.

Big earners can expect to see their favorite deductions whittled back as well. Home mortgage interest deductibility will get capped at mortgage values of $250,000-$500,000. Limits will be placed on tax-free charitable donations. Company provided health insurance will become fully taxable as regular income, and will eventually get blended in with Obamacare.

The really big impact President Clinton will have on the future of the country will be with her Supreme Court appointments. It is likely that at least one conservative justice will retire or die before the end of her second term in 2024.

That will enable her to shift the 5-4 convective majority to a liberal one for the first time in 50 years. That assures a liberal bent in the Court?s decisions until 2064. After that, I will be long dead, or 112, so I won?t care what happens.

A rapid succession of legal challenges will follow that will eventually bring to an end of gerrymandering of congressional elections and anonymous corporate campaign donations. That will turn Texas, Arizona and several other states into blue ones. Gay rights will reach full equality, if it hasn?t already happened by then.

This has already happened in California. What was the outcome? Radicals on both the right and left were abandoned in droves, as there was no longer any mileage there. Everyone suddenly became a moderate and pragmatist. Gridlock ended, and the government returned to doing the people?s work. Ratings on cable TV talk shows fell.

Who will Hillary bring into her cabinet? I suggest former presidential candidate, Mitt Romney, as the next Secretary of Health and Social Services. He is the only person who has every gotten government provided health care to work in the US, with his highly successful Massachusetts program.

I think it will take ten years to fully implement Obamacare and for it to become actuarially sound. In the end, Obamacare should cost the government nothing, and reduce the cost of health care for the rest of us. That?s how the Lloyds of London insurance exchange functions. A private equity guy should be able to deliver that, right?

So who will be Hillary?s first appointment to the Supreme Court? President Obama will be only 55 when his second term ends and is a constitutional law professor with a proven track record. The kids are already placed in local schools. The only thing he will be need is a new residence. What else is an ex president supposed to do?

The bigger question will be what to do about Bill? Will he be the first husband, the dude, or just another Mr. President.

Mr. and Mrs. President? The possibilities boggle the mind.

Looking for a Replay

 

Are You Ready for President Hillary?

President Barrack Obama certainly arrives at a party like a rock star.

Three silver GM Suburban?s flanking a hulking, armored black Cadillac limo screech to a halt with lights flashing. All of the roads in the immediate vicinity are closed to traffic.

A dozen sunglasses bedecked Secret Service agents leap out, immediately scanning the perimeter. The president bounds out and briskly walks to the plush home of a wealthy supporter.

I managed to briefly touch base with the president during his recent fund raising swing through the San Francisco Bay area. There, I received a sweaty handshake and a thank you from the former South Chicago community organizer.

It was all part of a broad swing through the Western states to rally the faithful, and to top off the DNC's coffers, which has raised a record $50 million in California this year. Perhaps Obama just wants to be among friends. While his national job approval rating languishes at 47%, it is 55% here, and an eye popping 72% among Democrats.

Since the 2012 election, some 6 million millennials, generation Y's, or echo boomers have gained the right to vote. Have you spoken to your kids lately? The only issues they care about, the environment, global warming, gay rights, and ending the war, are overwhelmingly Democratic ones. Another 4 million immigrants have also joined the voter rolls.

Sure, only 30% of these groups vote at all. But when election results swing on majorities that can be counted in the hundreds, think Florida in 2000, Ohio in 2004, and Minnesota in 2008, they could make a decisive difference.

The polls we see reported daily are only taken of participants with landlines. So they may be undercounting both cell phone addicted, texting millennials, and immigrants. How many of your kids have landlines? My bet would be none.

Now, let me throw one big unknown out there. Thanks to the Supreme Court's Citizens United vs. the Federal Election Commission decision, the most recent election was the first to see unlimited anonymous corporate donations since the sixties. As a result, the number of election ads disclosing donors has fallen from 97% in 2006 to 32%.

California's proposition 23 was a perfect example of what this means. Billed as the 'Save California jobs bill,' the measure was placed on the ballot and promoted by $6 million in financing from Texas base energy giant Tesoro Petroleum (TSO). And what is the company's plan to create California jobs? Suspend the state's stringent environmental regulations so it could build a new oil refinery in nearby Martinez.

In every postwar election, the party in power has lost an average 27 House seats in the midterm elections. Obama knew this the day he walked into office. That is why the most radical parts of his agenda, like health care, were front end loaded. Expect to hear much about the President's surprise, Clintonesque move to the middle, which was in fact, planned two years ago.

Yes, I know, I should stick to my day job of calling every turn in the market. But sometimes, that profession and making political prognostications become one in the same. Knowing who the next president is going to be is an immensely valuable piece of market information, as the economic philosophies of the two parties are so radically different.

Do you think the White House situation room has a ladies room?

You Look Pretty Safe to Me

I managed to catch up with my friend, Harry Dent, the other day, the guru on all things demographic (click here for his). Regular readers of this letter are well aware of the enormous headwind impeding all assets classes caused by the retirement of 80 billion baby boomers, which started in earnest at the beginning of 2012. With only 65 million Gen Xer?s of the following generation to buy their assets, prices could only head southward, as they have for the past six years.

My question for Harry was ?When does the headwind turn into a tailwind?? That would indicate when demographics shift from a barrier to asset price appreciation to an accelerant. Of course, Harry had the answer on the tip of his tongue: 2023. That is the year when baby boomers cease to be a drag on the economy, safely ensconced in nursing homes, wondering if their diapers will get changed on time.

That will leave 65 million Gen Xer?s chased by 85 million millennials trying to buy their assets, triggering a 13-year boom. A labor shortage will ensue, driving up wages, boosting consumer spending, and igniting another real estate boom.

Globally, the picture is a little more complicated. Demographically, China and Europe will become dead weight from 2036, cutting into growth at home. The US will then experience a 12 year echo boom from 2045, taking growth rates back up. There are exceptions. Rapid population growth and rising standards of living are expected to keep India strong all the way to the late 2060?s.

The biggest question of the decade for investors will be when the markets start to discount the great economic boom starting in 2023. Look at the last cycle for some clues. While the first baby boomer hit retirement age on January 1, 2012, the financial markets started to roll over five years in advance, in 2007, while the less liquid real estate market topped out six years ahead of schedule, in 2006. Check out the Case-Shiller chart below to see that I?m right.

This timing suggests that you should buy your new home in 2017 and load your portfolio with high beta risky stocks in 2018. But that is only if history repeats itself. Until then, try not to go broke.

The Next New Round of Buyers?