LPETTET
Earlier this year, I wrote about several ways to get exposure to a possible second Trump term, including Trump NFTs, Rumble (RUM, RUMBW), and Trump Media & Technology Group Corp. (DJT). I disliked them all, especially DJT (DWAC at the time).
SA
My views are unchanged since then. But I also mentioned a leveraged bet on Trump that I own and love:
There is a possibility that we see both the end of the Chevron Doctrine deferring to regulators at the Supreme Court at around the same time as the end of the Biden administration. So, companies that have suffered under aggressive regulatory burdens could flourish. One of the most leveraged bets on Trump is Fannie (OTCQB:FNMA, OTCQB:FNMAS, OTCQB:FNMAT) and Freddie (OTCQB:FMCC, OTCQB:FMCKJ, OTCQB:FMCCH); they’ve suffered under Biden but could have a route to realizing value under Trump. Their prefs have more ways to win than common.
The Chevron Doctrine deferring to regulators was killed off by the Supreme Court today. But will Trump win? Probably. I place the odds at least two out of three.
Will Donald Trump Win?
Betting markets have been remarkably stable until today’s volatility.
PredictIt
Poll averages show Trump ahead by about 2%, but I expect that margin to widen from here:
RCP
However, Biden’s problems are worse on a state-by-state basis. He is struggling in sunbelt states such as Arizona, Nevada, and Georgia. That means he would have to sweep the rust belt states of Wisconsin, Michigan, and Pennsylvania.
RCP
And then there was Biden’s debate disaster. It utterly validated special counsel Robert Hur’s description of the president,
We have also considered that, at trial, Mr. Biden would likely present himself to a jury, as he did during our interview of him, as a sympathetic, well-meaning, elderly man with a poor memory. It would be difficult to convince a jury that they should convict him—by then a former president well into his eighties—of a serious felony that requires a mental state of willfulness.
Last night, he came across as every bit an elderly man with poor memory, incapable of a mental state of willfulness. His handlers have been saying for months that he is spry and alert away from the microphone. They have been lying.
Now what? Most likely: Biden loses and Trump wins. Biden’s weaknesses are difficult to message. You are overtaxed? That isn’t a hypothetical concern that someone can explain away. You see inflation at the grocery store? “No, you don’t” is hardly a convincing counterpoint. You were lied to about Biden’s fitness. A greater quantity of lies won’t improve their quality.
But this is a competitive system, and Democrats won’t go down with Biden if his loss looks as likely as I think it is. California Governor Gavin Newsom was all over the post-debate spin cycle, looking more in sadness than anger at the debacle, but also looking very presidential. The Democrats could find a consensus alternative among the competent Democratic governors such as Colorado Gov. Jared Polis or Pennsylvania Gov. Josh Shapiro (the Republicans are more committed to Trump but could also switch out for a far more electable gov such as Georgia’s Brian Kemp or Virginia’s Glenn Youngkin). An irony of this year’s political dynamics is that Biden is the Republican’s not so secret weapon and Trump is the Democrats’. Any normal candidate would obliterate the other party’s presumptive nominee in the electoral college.
A serious delegation, say, led by Pres. Clinton and Pres. Obama, could approach Biden to step aside. If he balks, a compromise could be to replace the unpopular Vice President with a consensus candidate, paired with a plan for Biden to step down shortly after a victory. That could appease Biden’s ego and transition to a more sentient leader of the free world.
Caveat
Trump could lose or fail to privatize Freddie and Fannie if he wins. The chance radically rises if the Democrats switch out Biden for a more electable nominee.
Conclusion
Trump has at least a two out of three chances of winning this election. If he does, he will probably enrich Freddie and Fannie pref holders by privatization. And whether he does, the likelihood will get meaningfully priced in if he gets elected.
TL; DR
I own some (FNMAS), (FNMAT), (FMCKJ), and (FMCCH); you might want to too.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
