The United States presidential campaign continues as each state nominates candidates for each party. The first election, the Iowa caucus, unfolded pretty much as I had predicted in last week's column. I had said "I predict [Ted] Cruz and [Bernie] Sanders will have won the Iowa caucuses followed closely by [Donald] Trump and [Hillary] Clinton." Cruz did pick up Iowa followed closely by Trump on the Republican side. On the Democratic side, Sanders and Clinton were in a virtual tie, with Clinton narrowly edging Sanders out by 0.2 percent. The U.S. presidential election is arguably the most important internationally, and the leaders chosen this year will undoubtedly affect the global economy, including Turkey. This is why it is so important for investors to correctly predict the outcome and invest accordingly.
Today, the voters of New Hampshire take their turn in the second election and the first primary of the cycle. Trump is favored to win for the Republicans in New Hampshire while Sanders and Clinton look to be headed for another close call. I believe Trump's luck has run out and he will lose to underdog Senator Marco Rubio. Rubio appears to be the most electable of the Republican candidates, and the voters have begun to think about the general election. Cruz, while strong in conservative Iowa, will continue to face an uphill battle in the coming states. I had also said several candidates would drop out of the race following Iowa. Two of those that I did mention, Rick Santorum and Mike Huckabee, did drop out after poor showings in Iowa. Santorum went on to endorse Rubio, adding to the momentum he appears to be enjoying. In the Democratic race, look to Sanders to take New Hampshire from Clinton.
As for the end-game, with a hefty war chest to go the distance, Jeb Bush will most probably stick around until at least March 1, which is known as "Super Tuesday." "Super Tuesday" is when 15 races occur on the same day, thereby nearly handing victory to whoever takes those elections. Chris Christie conversely does not have the money nor does he have the staying power to wait out his opponents until the more liberal states choose their Republican nominees. Therefore, barring a miracle, Christie will most likely exit Tuesday night following the results from the New Hampshire primary.
Should Trump do as badly as I think he will, he may exit as early as Tuesday night or he may declare victory by the slimmest of margins. Former front-runner Ben Carson has nowhere to go but down, but does not appear in any hurry to drop out. This addresses all the major candidates running for the Republican nomination. On the Democratic side, Clinton needs to clinch the nomination as soon as possible lest she enter into another drawn-out battle for the nomination. Not only will she be wasting valuable campaign dollars fighting Sanders, she will also be taking hits from him, hits she could avoid should her primary season end early. An early resolution to the nomination would allow Clinton time to plan for the general election.
As Americans vote, the world watches. Investors appear to be weary of the turn-around in the U.S. economy and have discounted the latest unemployment numbers out of Washington. While the 4.9 percent unemployment rate sounds great, the participation rate, or the number of people who can work who are working, is at near 40-year lows. This metric has never really turned around since the Great Recession, and with continued difficulties in the eurozone, Turkey's economy has taken a little bit of a breather. While the Turkish lira is actually up over 3 percent against the dollar in the last two weeks, the benchmark BIST 100 index of the Borsa Istanbul stock exchange continues to trade in a tight range. The BIST 100 index has fallen below 70,000 points and risen above 74,000 for the third time in as many months, trading above 74,000 points last week. The Turkish investor, like all investors, is looking for direction in a market caught up in the armed conflict in Turkey's south and southeast.
With the Obama administration entering its final months, do not expect any major steps to be taken in Syria. In the absence of decisive U.S. leadership, NATO will be hard-pressed to adopt any bold new strategies in combating DAESH and the Assad regime. This leaves Turkey fending for itself in combating DAESH terror and Russian-supported Assad-brutality. The continued bombing of Aleppo has only added to the humanitarian crisis, pushing thousands of more refugees across the border into Turkey. History will remember those who turned a blind eye to perhaps the greatest refugee crisis the Middle East has seen in decades.