Because the US voted on Tuesday, I watched workmen board up companies in Manhattan to guard buildings from protesters. Some (the workplaces of PwC) used plain picket boards; others (Givenchy) had fashionable limitations that projected their emblem. One (Principle clothes) even featured cheery flowers on the wooden.

All signalled three issues: first, enterprise leaders know the political local weather is (sadly) creating profound new dangers; second, many are braced for this to final; third, a number of firms are placing a courageous face on it and attempting to adapt.

Traders ought to study from them. Even when there’s a clear end result to the US presidential election quickly, this week’s occasions usually are not an outlier — that is the fruits of a zeitgeist shift that has been constructing for a dozen years. Traders should recognise this, because it won’t be reversed whoever subsequent sits within the White Home.

Assume again to early 2007, simply earlier than the monetary disaster. It was taken without any consideration by western enterprise leaders and financiers — or “Davos man” — that globalisation, free-market capitalism, innovation and democracy had been self-evidently good issues that will solely unfold and deepen.

No, that didn’t imply traders accepted the “finish of historical past” thought pioneered by historian Francis Fukuyama. However there was an assumption that the world was shifting in a single route. That fostered confidence to plan forward with a imaginative and prescient of time — and time horizons — as constant as Newtonian physics.

Not. Since 2008, religion in all 4 of these concepts has wilted. Globalisation is the obvious living proof. As an annual metric compiled by DHL and NYU Stern Enterprise faculty exhibits, the worldwide integration of cash and items has slowed, though the motion of individuals and knowledge (through the web) has remained extra strong.

And within the case of the US, the White Home is sort of definitely set to maintain embracing America-first insurance policies whoever wins. The one distinction is that the model of “patriotism” from the Democrats’ Joe Biden would sound cuddlier than Donald Trump’s, embracing world local weather change initiatives and selling a method of localisation tightly enmeshed with pro-union insurance policies.

Free-market capitalism can be in retreat. That’s partly as a result of the US Federal Reserve has unleashed so many trillions of {dollars} of quantitative easing that monetary market indicators are being distorted. The divergence of equity prices from the true financial system this 12 months is one instance of this.

However keep in mind, too, that even below Mr Trump, politicians have been keen to offer authorities support throughout Covid-19, be that for households or chosen industries, akin to coal. In the meantime, the late Twentieth-century mantra of shareholder capitalism is on the retreat within the US and European enterprise worlds.

That appals followers of Milton Friedman, the economist who laid out this shareholder mantra 50 years in the past. Nevertheless, Friedman’s acolytes ought to keep in mind this: shareholder-first concepts had been developed within the Seventies, when it was assumed that companies might depend on the US authorities to resolve societal issues, as a result of the latter appeared competent. That is not the case.

Innovation can be contentious. The 2008 disaster made unfettered creativity in finance appear harmful. This decade has demonstrated the darkish facet of digital innovation: the web is eroding privateness, social media is undermining democracy and a winner-take-all digital financial system is exacerbating revenue inequality. Traders ought to brace for extra techlash (which issues, provided that Large Tech and communications accounts for 45 per cent of the S&P 500).

Then there may be the fourth difficulty that dominates headlines now: democracy. Fortunately, a Gallup poll suggests round two-thirds of Individuals belief the judiciary, a stage broadly unchanged within the final decade. However present occasions would possibly but undermine that. And even earlier than the election sparked allegations of voter fraud, disenfranchisement and energy grabs, solely a 3rd of voters advised Gallup they belief the legislative department — sharply down.

All this implies the US has been sliding in the direction of what the US military calls “Vuca”: volatility, uncertainty, complexity and ambiguity. This week’s occasions are a symptom of this, not a trigger.

So how ought to traders reply? First, they need to count on asset costs to be unstable. Second, they need to do not forget that time horizons can change — and are actually shortening. Third, they need to word that it pays to embrace companies with a “just-in-case” mentality, moderately than the “just-in-time” philosophy that dominated the growth of world provide chains in earlier a long time.

Final, they have to realise that the environmental, social and governance trend, and stakeholder mantra, will stay whoever wins the election. That isn’t as a result of ESG is a instrument of activism; the important thing difficulty is that it’s also a instrument of danger administration. In a Vuca world it pays to be resilient, and firms can solely accomplish that in the event that they observe the “externalities” that was once excluded from economists’ fashions — akin to revenue inequality or local weather change.

Or to place it one other means, traders ought to take a leaf from the ebook of these Manhattan retailer homeowners: batten down the hatches; settle for that uncertainty will final; embrace lateral imaginative and prescient, not tunnel imaginative and prescient. Then adapt with some metaphorical flowers.

gillian.tett@ft.com

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