Some musings from a tropical Christmas Eve in Boston…

1) “FANG” [Facebook, Amazon, Netflix, Google] and Apple are the Detroit Big Three of the early 21st century. Much ink has been and will be spilled over the fate of unicorns. There will be a handful of winners and a lot of losers as there always are with these things, but I’m more interested in the actions of the big guys, who increasingly seem to be consolidating their grip over the digital world. Once the unicorn shakeout happens this will increasingly be the case. What will these titans do to shape the future of e-commerce, media, advertising, communications, and perhaps transportation?

2) National security and immigration have replaced the economy as the biggest issue in American politics. This flip happened after Paris and San Bernardino. We haven’t had an election in this new world yet, so it’s too soon to say what the political impact will be, but so far it feels like it will benefit the Trumps and Cruzes of the world at the expense of the Elizabeth Warrens.

3) The GOP is now the party of Ted Cruz. Pre-2008 the GOP was best understood as a three-legged stool of social conservatives, fiscal conservatives, and national defense Republicans. In 2015 it’s more muddled than that. You have tea partiers, evangelicals, quasi-libertarians personified by Ron and Rand Paul, secular downscale whites that Donald Trump has unearthed, and the Wall Street establishment. Ted Cruz is seemingly the only Republican with the potential to unify all of these constituencies. He may not be the most electable Republican in the party’s presidential field but this is Ted Cruz’s party and he’s probably best positioned to be the voice and representative for the party on the top of a national ticket.

4) The roar of secular downscale whites. I’m less interested in what Donald Trump says than what he’s revealed. Neither party really wants these people. They can’t find a home in the Democratic party because they’re the cultural antithesis of what the Democratic party stands for now, and in the GOP the establishment thinks they hurt the party’s electability, they’re not particularly socially conservative, skeptical of foreign engagement, and not necessarily for lower taxes and lower spending. But they represent a significant portion of the American electorate, perhaps 20-25%, and any faction that comprises 20-25% of the electorate is going to get significant political representation. It used to be that they’d have to go along with what the GOP Wall Street establishment wanted, but increasingly it appears that the GOP establishment will have to go along with what this group wants. TBD.

5) Democrats in 2015 are where the GOP was in 2007, a party one presidential loss away from being torn apart internally. Hillary Clinton is the only thing standing between the Democrats fighting an internal war between Black Lives Matter, a Bernie Sanders/Elizabeth Warren faction, and an electability/establishment faction. Anyone handicapping the presidential race right now would give Democrats a 55-60% chance of winning next November, but if a macro wave carries a Trump or a Cruz to victory it’ll be interesting to see the minority party’s conspiracy theory shift from “that crack-smoking socialist Kenyan Muslim” to “that racist, theocratic, fascist.”

If America experiences a “Lehman moment” over the next few years, it’ll be political, not economic or financial.