Policy, Politics, and the Strangest Election Ever

Transcription

1 Policy, Politics, and the Strangest Election Ever Scott Eckel Schwab Legislative and Regulatory Affairs

2 Congress: The Lay of the Land Republicans control both chambers of Congress but narrow Senate margin, looming election mean very little likely to get done this year House 247 R, 188 D Senate: 54 R, 46 D (including two Independents) Largest House GOP majority since WWII, but 2

3 Legislative Issues December budget deal takes some major fights off the table Debt ceiling won t need to be addressed before summer 2017 No threat of government shutdown until fall and even then it s unlikely Supreme Court opening is polarizing issue that may impact battle to control the Senate The Ryan Effect How long will the honeymoon last? Normalized appropriations process and tax reform are top priorities Legislation to address Puerto Rico debt crisis

4 Key Regulatory Issues: DOL Fiduciary Final DOL fiduciary rule issued last month Broadens definition of who is a fiduciary in retirement context New interpretations of what constitutes investment advice, education, and recommendation Best Interest Contract (BIC) Exemption opens up significant legal exposure Significant impact on rollovers new Level Fee modified BIC could be helpful for some firms, especially RIAs Some implementation period relief but still quick for major re-working of ERISA Legislative efforts to overturn/delay implementation unlikely to succeed Legal challenges have been filed 4

5 Other Key Regulatory Issues SEC Continues to Mull Market structure issues SEC Asset Management Rulemakings 12b-1 Fees DOL Fiduciary Fallout SEC Share Class Initiative IA/BD Exam Resources CFPB Arbitration Rule Proposed 5

6 We are at a point where knowledge of political history and an understanding of what usually happens are useless. The expectation has been that these insurgents will soar high and collapse That remains a decent guess but nobody really knows anything. Charlie Cook, National Journal Daily, 9/15/15 6

7 2016 Elections: Let s All Run for President! 7

8 2016 Presidential Race This campaign has upended everything we thought we knew about how elections are supposed to work Anger driving the debate on both sides Thirst for an outsider Huge disconnect between rhetoric and achievable policy goals 8

9 2016 Election: Republicans Trump The presumptive nominee Historically unorthodox campaign Tactics Strategy Substance Cruz Establishment darling? Was Cruz/Kasich alliance a blunder? 9

10 2016 Election: Democrats Delegate count as of 6/8 (2,82 needed for nomination) Clinton 2, SD = 2,765 Sanders 1, SD = 1,864 Clinton now the presumptive nominee, but it wasn t easy Clinton won 28 states, while Sanders won 22 (only DC remains) Decisive victory in California put Clinton over the top How does Clinton appeal to Sanders voters, especially young people? 10

11 Electoral College Source: National Journal; archives.gov RI CT NJ DE MD DC Democrats have won 18 states + DC in last six elections Those states total 242 electoral votes Republicans have won 1 states in last six elections Those states total 102 electoral votes If the Democrat candidate wins those states again plus Florida, he or she would be president (242+29=271) 11

12 2016 Presidential Race Unanswered Questions Who s going to win? Latest Nat l Poll Avg -- Clinton 44.1% - Trump 41.0% (Source: realclearpolitics.com 6/9/16) Where is the anger coming from? What is the future of the GOP? Trump/Ryan What s it all mean for investors? 12

13 2016 Election: Senate Not as high profile, but battle for Senate control will be very tight Near mirror image of 2014 playing field this time R s will be on defensive Republicans have majority, so Democrats need 4-5 seat pick-up to flip control D candidates currently favored to pick up seats in IL, WI Close races for GOP-held seats in NH, FL, PA, OH, NC & AZ Dems have to defend NV, where Harry Reid is retiring, and CO Presidential nominees will likely have big impact on Senate control 1

14 Important Disclosures All expressions of opinion are subject to change without notice in reaction to shifting market, economic or geopolitical conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner or investment manager & Co., Inc. All rights reserved. Member SIPC. ( ) 14

15 Thank You