I have written with some trepidation about the potential consequences that will result from Trump 2.0. The global macro-economic outcomes of some of the promised policy actions could be dramatic.
Markets seem to have taken an optimistic turn in the last few days. That probably means that participants are betting that there is more bluster than real intent in the bombast that has always characterised Donald Trump’s attempts at global politics.
I am in no way convinced that this optimism is justified but am happy to look at better numbers in my portfolio valuations, of course!
I am not proposing that the most damaging or bizarre of the touted policies will, or will not, be actioned. I don’t really think we will know that for a while, although some actions are promised even for today.
It often takes years for some major political missteps to impact economies and financial markets permanently – Brexit is a great example of that, although I know not everyone agrees with my view that for Britain’s financial markets it was a mistake. Only the most partisan could now argue that there was a boost to the UK’s global status as a financial centre in the years since Brexit. Other consequences are now apparent, although not much publicised.
I personally remain very nervous about the immediate future consequences of the 47th presidency of the USA. I think there are a few likely scenarios, but it is pointless speculating ahead of the inauguration.
Rather better to keep a close eye on the news and market reactions to the news as it emerges, not forgetting to try and work out the longer-term consequences. I will do my best to add interpretation as soon as I have an opinion.
