Ye shall know them by their fruits”, or l’appel du vide”?

Naturally, we could not resist penning (or keystroking), a post on the outcome of the US elections. We shall not opine on the supposed “rights or wrongs” of the outcomes, as we have no interest in being seen to meddle in politics, but are focused on identifying and managing consequences, risks and opportunities.

However, we would observe that recent behaviour by a broad spectrum of those who supposedly have the interests of the Republic and its citizens at heart, seems more in keeping with what the French tellingly call l’appel du vide (strictly-speaking “the appeal of the void”, but probably better rendered in plain, colloquial English as “having a death wish”), having overstepped the usually accepted boundaries of civilized political debate and demonstrating a remarkably nihilistic mindset. As we have written before, cooperation and trust are essential to sustainable economic growth.

Matthew 7:16 also came to mind, as quoted in the title; because, while rhetoric has consequences (as was amply demonstrated by the outcome of the elections), policies and actions ultimately matter more; and the (re)insurance industry will have to adapt (as always), even if some two thirds of those polled beforehand by industry publication Intelligent Insurer apparently would have preferred Secretary Clinton as US President rather than Mr. Trump.

It is also worth pointing out that almost all the “experts”, pundits and prognosticators, as well as “mainstream” media got it very wrong (Does that remind anyone of another recent “shock”?). A review of Nassim Taleb’s polemic “The Intellectual Yet Idiot” ( may also be in order for purposes of re-education.

Naturally, at Awbury (as with Brexit), we had been reviewing our portfolio of risks and opportunities before the elections; because, in the real world of risk management one has to be prepared to contemplate all realistic outcomes. Readers will, no doubt, have their own views as to the potential impact of what transpired; and there have, of course, been numerous immediate predictions as which industries and/or trade relationships will benefit or be negatively impacted (Mexico, anyone?). All flippancy to one side, the reality is that it is far too early to be certain of much, because campaign rhetoric and pandering have to translated into a ranking of legislative and executive authorities. Less febrile speculation and more rational Bayesian probability weightings are in order.

Nevertheless, it does seem reasonable to assume that the “hydrocarbon industrial complex” will benefit overall, as will spending on infrastructure, broadly defined. The former may be slightly more “ideological” than the latter, which is generally viewed as non-controversial; but both, in our opinion, represent solid longer-term opportunities. It is also likely that a Trump administration will take a more relaxed view on the permitting on new or extension pipelines.

Also, while Mr. Trump has spoken in the past in favour of a possible return of the separation between commercial and investment banking, it seems likely that the financial industry will get some respite from being a regulatory punch-bag, with repeal of most if not all of the Dodd-Frank Act on the agenda. So, we expect some reduction or at least slowdown in regulation; with the US removing the keystone from the global regulatory arch. As always, this will create unintended consequences and unexpected opportunities for the adaptive and nimble.

Interestingly, unlike post-Brexit, domestic markets have (after an initial bout of nerves overnight) reacted fairly positively to the outcome (with some single counter exceptions), so there is perhaps some hope that those involved have realized that a knee-jerk reaction is often not the correct one.

We would be happy to discuss our views in more detail with our partners and clients.

The Awbury Team


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