The Sunday night U.S presidential debate between Hillary Clinton and Donald Trump did not turn into the knockout punch Clinton needed to guarantee her win in next month's election. Following a two-day period in which an embarrassing tape of Donald Trump surfaced from an entertainment show recorded in 2005, the debate was much hyped and much watched. Many officials, including former Republican nominee John McCain rescinded their endorsements of Trump following the release of the tape, a sign the party was giving up on Trump. A desperate Trump came out swinging Sunday night and gave his supporters the show they were looking for. With only one final debate remaining, the U.S. public is left to choose between two candidates whose net favorability ratings are the lowest in recent memory.
The "town-hall" style debate was meant to allow members of the audience to ask their own questions and spur debate on issues that were yet to be covered in the previous debate. The second debate, however, turned into a mud-slinging brawl in which Trump invited four women who allege they were sexually assaulted by former President Bill Clinton as his guests. Trump's move was in response to Hillary Clinton's accusations that a man that jokes about sexual assault (as Trump can be heard doing in the released tape) is "unfit" to be president. The first third of the debate focused on these allegations, with the moderators struggling to keep the debate substantive. The remainder of the topics covered in the debate included the "Affordable Care Act," better known as Obamacare and how each candidate would "fix it." Trump pointed out that former President Clinton called it "the craziest thing in the world" with Hillary Clinton responding the quote was taken out of context.
The debate continued with questions about taxes, how to deal with Daish, tax cuts, and improving the economy. Nearly every question was answered by Trump with no specifics in typical Trump style, and only a promise that he would make improvements where Clinton had not, in the 30-plus years she has been in the political spotlight. Clinton, however, delivered polished and well-rehearsed answers to nearly all questions, occasionally being interrupted by Trump. What struck me however was that neither politician really answered any of the questions. Furthermore, promises made by the presidential nominees are subject to their ability to implement these legislative pledges.
The reality is, the U.S. president's most powerful role is that of commander-in-chief of the military. One of President Obama's most famous promises, to close the military prison in Guantanamo Bay, Cuba has yet to be honored now eight years later. Obama faced Congressional push-back in emptying the prison and has thus been unsuccessful at closing the facility. Similarly both candidates will be hard-pressed to in act any meaningful change absent congressional support. Whatever the outcome of the presidential race, the new U.S. president will face an unwelcoming Congress. This will make enacting legislation difficult and the U.S. economy will suffer as a result.
The Mexican peso has emerged as a proxy for the likelihood of election of either candidate following Trump's fiery anti-Mexican rhetoric. The peso rallied to a near two-month high against the U.S. dollar following Sunday's debate as investors bet that Trump would lose the election. With only four weeks remaining, Clinton does appear to be the favorite, however, if elected, Clinton would be the oldest U.S. president ever elected. This means that her vice presidential pick, Tim Kaine, may well be tapped to take over from Clinton should health complications arise as was reported in August. This adds another layer of uncertainty to the U.S. presidential election as Trump would also be the oldest U.S. president elected.
Trump's anti-Federal Reserve (Fed) comments at the last debate were not repeated in this debate, however most analysts believe that the Fed will not raise interest rates ahead of the U.S. election, despite three Fed governors have come out in favor of raising them this year. This, as the Fed does its utmost to appear apolitical.
Last week three Fed officials implied a rate hike was imminent. On Monday, Chicago Fed President Charles Evans walked back these comments from his fellow Fed officials implying that the non-farm payroll data released on Friday hurt chances of a December hike, saying "December could be an appropriate time to do it, but I don't see any urgency either."
I predict uncertainty in the U.S. presidential election and beyond, coupled with the near certainty of a hard Brexit, means no Fed hikes for the foreseeable future.