In a wide-ranging discussion during Commonwealth FinancialNetwork's annual conference on Nov. 4, the independentbroker-dealer's chief investment officer, Brad McMillan, addressedthe major issues on every financial expert's minds, but added hisown twist to the received wisdom on the Federal Reserve and thepresidential election.

When asked whether the Fed will raise rates at its Dec. 15-16FOMC meeting, McMillan answered that “it isn't a questionof raising rates, it's a questionof normalizing rates.” The Fed, he said, has“backed itself into a corner,” and now must “hustle to catch up”with an improving economy by instituting a 25 basis point increasein December. It's arguable, he suggested, that the Fed has “waitedtoo long” to raise rates, though he also suggested that having theFed governors take their own policy-making Hippocratic oath—“first,do no harm”—would be appropriate.

The Fed's nonaction, in which “we've seen the Fed shoot therecovery in its foot,” can be replaced now by a confidence-buildingraising based on wage growth, a labor shortage and an employmentboom, all of which may well “kick off top-line growth” in theeconomy.

That scenario—the transition from a policy-driven to afundamentals-driven economy—is one of the three major transitionsMcMillan sees playing out in the near future for U.S. markets andthe economy.

He also sees the major issues in the presidential electioncampaign as being “symptomatic” in part of another majortransition: from “global to local.” That transition is reflected inboth major-party candidates speaking against any expansion offree-trade agreements, and in the anti-immigration policies ofDonald Trump, which are similar to those of other politicians andpopular movements around the developed world. While what willdevelop policy-wise in the next adminstration will not be“yesterday's protectionism,” globalization, he concluded, will be“less of a contributor to growth going forward.”

That's why McMillan believes that the Nov. 8 election will bethe “start of the show, not the end” of these issues that havecaused so much sturm und drang in the 2016campaign, and that the splits seen in both major parties aresymptomatic of “the 99%” being unhappy with their lot in life.While Trump's utterances may be “outside” the policies expressed byboth Democrats and Republicans over the past 50 years, they reflectstrong feelings among the American public, so Trump is more of a“feature, not a bug.”

As for a President Hillary Clinton, McMillan said she will have“Bernie Sanders and Elizabeth Warren pushing her,” which is likelyto result in “more dysfunction” in Washington. A Trump victorywould likely result in a market correction, he said, but if eithercandidate wins, we can expect increased government spending, whichwould also likely increase consumer spending.

Over the next 12 months, we thus could see “much better growth”in GDP, helped along by the third major transition, of “capital tolabor.”

Over the past 30 years, McMillan says we've seen the financialsector grow and capital markets come to dominate the U.S. economy,while wages fell (partly due to an abundance of labor) andcorporate profits rose. As seen in the most recent wage report,however, wages are increasing and there is a “relative scarcity oflabor,” leading major employers like WalMart and others toraise.

As a result of the last 30 years, labor now “has a chip on itsshoulder, and rightly so,” which both Bernie Sanders and Trump usedto their advantage.