February 2017

For the fall Q & A, we chose the U.S. Election as our area of focus.   We hope you enjoy!

Q – What date is the U.S. election?
A – Tuesday - November 8th, 2016

Q – How does the Election work?  
A – As a US citizen, when casting your vote for President, you are actually voting for an elector(s) in each state.  These electors then vote in the President (usually in December).  There is one elector for each US Senator and US representative from that respective state.   For example, the state with the largest electoral votes is California with 55.   In other words, California has 55 people representing the state in congress (Senators and/or House Representatives).    

Q – How many Electoral votes are there?                                                                                        A- There are a total of 538 electoral votes (known as the Electoral College) and therefore a candidate needs 270 electoral votes to win the Presidency.

Q - Do electors have to vote for their party’s candidate?
A – There are laws in over half the states that require the electors to vote for their party’s nominee.  However it is common practice in all states to vote for their party’s candidate.

Q – What is a swing state?
A - A swing state, otherwise known as battleground state, is where no single candidate has an overwhelming support of the votes.   Therefore the electoral votes could go to any political party in the election.  The most common swing states from past elections are Florida (29), Pennsylvania (20), Ohio (18) and Michigan (16).
With the exception of Nebraska and Maine, all states are a “winner takes all” format.  In other words, if a candidate receives 51% of the popular vote in California, he/she receives all electoral votes for that respective state.

Q – If Hillary Clinton wins the election, how may this affect the financial markets?
A – Clinton’s views are not much different from President Obama’s.   Therefore if Clinton wins, North American markets would presumably be flat (already priced in) to moderately higher.  

Q – If Donald Trump wins the election, how may this affect the financial markets?  
A – This will provide for uncertainty in the markets.  Laws are passed through congress (first at the house level, then at the senate level).  Currently the republicans (Trump’s political party) controls the house and therefore any policy changes are likely to get passed.   Given the uncertainty with Trump’s political platforms, the North American markets would presumably trade lower in the event that he wins the election.

Q – What else could happen depending on who wins?
A - If Hillary becomes President:  

-House of Representatives will be controlled by the Republicans and therefore no immediate changes to policy                                                                                                                                                  -Clinton will push for 2 important policies - $275B infrastructure spending plan and immigration reform.    -Clinton takes a hard line towards provocations by foreign countries (China, Russia, etc.)

If Trump becomes President:
-  House of Representatives (Republican controlled) would give Trump power to change policies.
-  Strict immigration policy would send millions of illegal immigrants out of the country,    specifically those with criminal records.
-  Tax rates would quickly come down and therefore total US National debt would increase.  
-  Trump would increase military activity against ISIS in Syria and Iraq, but less foreign policy elsewhere. 
-  Trump would cut regulations in the Energy and Financial sector.
-  US companies who invest abroad and grow jobs outside the United States, will see significant changes in their business activity in the US.
- Would enforce US central bank changes, citing too much political influence

The information contained in this newsletter was obtained from sources which we believe to be reliable. However, this information is not guaranteed by National Bank Financial Inc., and may be incomplete.

National Bank Financial is not a tax advisor and clients should see professional advice on tax-related matters. Please note that comments included in this letter are not intended to be a definitive analysis of tax law. The comments contained herein are general in nature and professional advise regarding an individual's particular tax position should be obtained in respect of any person's specific circumstances. Please consult your tax advisor regarding your particular situation.