Earlier this week I watched that first debate ‘live’ to see Mrs. Status Quo win over Mr. Change. The market, which is naturally adverse to uncertainty, reacted as expected with a small uptick in the S&P500. In addition, the price of gold declined, the Mexican peso rallied (lower threat to future Mexican exports to the US), the yield curve flattened (lower risk of tax cuts and thus larger government deficits) whilst the Yen depreciated (lower probability of it playing the role of a safe currency post elections).
All these variables would naturally move in the opposite direction should the odds of a Republican win increase or should the Republican candidate win against the odds. Indeed, the markets are generally set on a Clinton win: PredictWise, which aggregates data from various market sources, ascribes a 78% change of a win for Mrs. Clinton (up from 68% before the first debate). This is roughly in-line with the NYT Upshot model (75%) and the Iowa Electronic Markets (73%)(as of Friday). So much confidence …
During the debate, both sides used a few zingers, these caustic remarks which are part of a positioning in a debate, courtroom or M&A negotiation, and which can momentarily disarm an opponent. Whilst the term ‘zinger’ is quite recent, the concept is not: As portrayed in the exceptional French film ‘Ridicule’ (1996), social status could rise and fall at the decadent court of Versailles in the 18th century based on one's ability to dispense witty insults and avoid ridicule oneself. They are a double-edge swords though: Whoever launches an attack should be ready for a cutting retort. Furthermore, a zinger which falls flat is the equivalent of an own goal. This may explain why Mrs. Clinton and Mr. Trump played it safe at the first debate, with neither coming close to attempting a ‘knockout’ blow.
Notwithstanding their entertaining aspects, debates tend to have a very modest impact on voters as discussed in a 2012 Washington Post article. Zingers can be remembered for a long time but the political reality is that they tend to be ineffective. So, US presidential candidates, how about focusing on more fundamental and lasting aspects of your positioning through storytelling?
Indeed, neuroscience now clearly demonstrates that narratives activate parts of the brain linked to feelings and emotions. In simple terms, scientific analyses of the brain’s functioning show that stories help people connect. In marketing, stories are welcomed by customers whilst ads are resisted – something which Coca-Cola is now masterfully capitalizing upon with its ‘Coca-Cola Journey’ communication channel. And eight years ago, the Barack Obama story conferred to his candidacy an additional, emotional dimension. For a moment, there was a connection between the American people and Mr. Obama.
Closer to home, storytelling has room to become much more prominent in corporate finance: IPO equity stories, M&A teasers, merger announcements, capital market days, etc. Beyond the buzzword-loaded zingers, the stories which could captivate investors’ mind and trigger an emotional response allowing investors to connect with a company and its management are often lacking.
Not much is needed. A powerful story can be captured in a concise fashion, a notion which has given rise to a literature segment called ‘Flash fiction’. It includes six-word stories, a concept which Mr. Hemingway is believed to have pioneered. His tale? ‘For sale: baby shoes, never worn.’ More here including ‘Torched the haystack, found the needle’ and ‘Spider caught in its own web’.
New York Times, “Your Brain on Fiction“, AM Paul, March 2012
The Fast Company, “The Simple Science to Good Storytelling”, February 2014
The Fast Company, “The Science of Storytelling: How Narrative Cuts Through Distraction Like Nothing Else”, October 2013