President Elect Donald John Trump

Posted: November 10, 2016 in Uncategorized

What a shocker! Even if I was one of a few believers that Trump could win – it is still a shock.

He is now President Elect and he will become the 45th President the 20th January 2017.

The market did not react (at least in the US) with an immediate sell off as the “Victory Speech” was much more Presidential and re conciliatory than expected and because the Republican won both the Senate and the House – avoiding the gridlock in Washington.

Market analysis sees also that Presidential elections have limited impact on the markets in the long term, but rarely we saw more divisive candidate.

The market will keep on rallying, but the winner and loser will be quite different than before.

Trump policies are based on fiscal stimulus (so more debt!), infrastructure spending, tax reform and less red tape.

Positive

In effect, it is what the economy needs – not continuous quantitative easing that generates returns only in the stock market. Relationship with Russia could improve and finally bring a solution of the situation in Syria and Ukraine and the annihilation of Islamic State. Also, a softening of sanctions would be great for Europe.

Negative

More debt could spike the yields in US and all over the world – inflation is already peeking out of its box since September. Inflation is a very strange “animal” – once out of its cage it takes life of its own. A strong inflation could send the world back into recession and completely change the winner and loser. Inflation was already starting to creep in the system and Trump would just accelerate it. Probably it will start appearing on the media radar in the second half of 2017.

The international relations will be most interesting to watch – specially versus Russia and China.

 

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