The day has come, and Donald Trump is the 47th President of the United States of America. Much has been written, said, and discussed about what this means, and there seems little merit in furthering the political debate. So, what are the financial markets telling us about the likely effects of the new administration on the world?
Equities have had a mixed reaction to the election results. Everything went up strongly at the start, particularly smaller and value stocks, but most stocks have since come off, and some are right back where they started. Strangely, those companies and countries that were expected to do worse, given tariffs et al, have performed the best. What this tells us is that Ygritte was right, and John Snow knows nothing (Game of Thrones, 2012).
Bonds have been the bearers of bad news. Yields are up, rate cut expectations have been taken off the table, and there is even talk of interest rates going up by the end of this year. That has dragged the Dollar higher by nearly 10% against the Euro and Sterling. What this tells us is that you can’t always get what you want (Rolling Stones, 1969). Higher growth, more exports, less inflation, and lower interest rates don’t always go together.
Since the 5th of November, oil is up 9%, Bitcoin is up 45%, Tesla is up 80%, but gold is flat. What this tells us is that it’s cold, there will be more meme coin launches, we can expect to be taxied in self-driving cars, but why worry (Dire Straits, 1985)?
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