Cumberland Advisors Market Commentary –  AOC or MCC

Author: David R. Kotok, Post Date: June 16, 2020
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“Do you have a forecast for the November election?” asked a client. Matt McAleer and I were doing a joint account review conference call. The question has been increasingly raised in our client and consultant review meetings. At the moment the answer is “no.”

David-Kotok-Quote - This is what’s best for my country

We watch the polls, and we noted the reduction in Trump victory betting odds by www.predictit.org. Many view this source as a good indicator since it represents real-money wagering. Our view is different. The website represents the betting odds today. Those odds are constantly changing with news flow. And the news flow between now and November is certainly likely to be volatile. So our position today is that it is too soon to forecast the November outcome.

There are, however, some election-specific elements we can look to today, and we think they may reveal prospective changes. One of them will be our topic for today’s political discussion.

New York’s 14th Congressional District is up for grabs in the state primary slated for June 23. The incumbent is the now nationally famous Alexandria Ocasio-Cortez (AOC) (https://ocasio-cortez.house.gov/), who was the surprise upset winner of the primary two years ago. The district is about 80% Democrat, so a victory in the primary usually suggests the outcome of the November general election.

But this time we have a real primary fight.

AOC is challenged by former CNBC personality and nationally recognized TV journalist Michelle Caruso-Cabrera (MCC) (https://michellecc2020.com/). MCC has severed ties with boards and companies and CNBC. She is running for Congress without the baggage of conflicts of interest. Her positions are much more centrist than AOC’s are. She has a record from her journalism and from her book, You Know I’m Right: More Prosperity, Less Government, https://bookshop.org/books/you-know-i-m-right-more-prosperity-less-government/9781439193235

Meanwhile, AOC has to defend a political record. She opposed Amazon’s attempt to locate a second headquarters in Long Island City, which ended with Amazon’s avoiding the New York site. MCC says that AOC “threw away those 25000 jobs” (although the site was not in AOC’s district and was opposed by many other local and state legislators and residents – see “Did Alexandria Ocasio-Cortez ‘Chase’ Amazon Out of Her NYC District?” Snopes, https://www.snopes.com/fact-check/alexandria-ocasio-cortez-amazon/). AOC also voted against the coronavirus stimulus package and was strongly criticized by MCC for doing so, although, in fairness, AOC’s defense of her vote was heartfelt. Her district was more impacted by COVID-19 than Most others in the country, and she believed that the composition of the stimulus package made it an insult to her constituents. (See “Caruso-Cabrera rips Ocasio-Cortez for opposing COVID stimulus package: ‘How out of touch can you be?’” The Hill, https://thehill.com/homenews/media/494982-caruso-cabrera-rips-ocasio-cortez-for-opposing-covid-stimulus-package-how-out.) That said, it is still true that AOC rejected a bill that included $75 billion in additional funding for hospitals and healthcare providers and $25 billion to help fund the nationwide effort to expand coronavirus testing. AOC was the only House Democrat to vote “no.” (See “AOC Only Democrat to Vote Against $484 Billion Coronavirus Relief Package,” National Review, https://www.nationalreview.com/news/coronavirus-relief-package-alexandria-ocasio-cortez-only-democrat-to-vote-against-484-billion-relief-package/amp/.)  For her part, MCC promises to work closely with House Speaker Nancy Pelosi in support of stimulus measures.

This primary is happening in the midst of the COVID-19 crisis and the Black Lives Matter protests. Thus it becomes impossible to predict both turnout and outcome. But the outcome could signify a lot if MCC prevails and AOC loses the Democratic party primary. The market implications boil down to socialism vs. entrepreneurial investment angles. If you’re a believer in markets, is it good for the United States to erode its position in the World Economic Forum’s Global Competitiveness Index? Many would see a MCC win as reflecting a movement of Democrats away from the far-left socialist views that Senator Bernie Sanders represents. We will know more after the polls close on June 23.

Primaries tell us a lot about general elections. Besides selecting candidates, they also tell us about national directional trend changes when there is a hotly contested race. We may look at other examples in future writings. For now our eyes are on the Bronx and Queens as we watch the AOC-MCC fight come to a moment of decision.

Let me add a personal note.

In a Democratic Party primary debate, AOC called those who have donated to Michelle Caruso-Cabrera’s campaign “reprehensible.” MCC then blasted AOC for “insulting thousands and thousands of people.” I am one of those thousands.

When MCC decided to run for public office, I called her and offered what help I could give her. She didn’t ask; I offered. She severed ties to avoid conflicts, and I live in Florida and cannot vote in Queens, NY. But I can contribute money, and I have done so.

MCC interviewed me many times. We worked on policy issues together. She took her first private China trip with a group of economics professionals. I helped arrange for her inclusion. She is smart, sharp, and deeply knowledgeable about economics and geopolitics.

In my view, replacing a radical socialist in Congress with a mature, skilled, articulate thinker is in our nation’s interest. This district will have a Democrat in Congress either way; there are very few Republicans in the district. To me, MCC is better for our country by a mile, and it is best if AOC is voted out of office. When AOC voted no on hospital and Covid money she went too far.  So, I put my money where my mouth is. In my opinion, this is not Republicans or Democrats; this is what’s best for my country.

David R. Kotok
Chairman of the Board & Chief Investment Officer
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