Well, the unthinkable has happened: what was previously considered to be the comic scenario, has come to pass, and Donald Trump is the President Elect of the United States of America. The people have spoken, and the political establishment seems to be in retreat. It took most of us by surprise, but perhaps recent referendum results ought to remind us of the potential perils of complacency. It appeared to all the world that the US Presidential Election was Hilary Clinton’s to lose, and she managed to do just that. Despite being considered by many as a loud-mouthed bully and bigot, Trump seems to have harnessed the increasing public sentiment against the status quo and the desire for change.

Initial shock reactions rippled around the world’s financial markets, but in a similar way to the Brexit reaction investors soon went back to the opinion that the world keeps on turning; the sun keeps rising and setting again, and life goes on. Clearly, there will be adverse effects, both from “Brexiting” and “Trumping”, but opinions vary as to the degree of these.

However, since the announcement of the result, there has been a marked change of tone from “The Donald”.  His first action after winning the election would be to “have Crooked Hilary thrown into jail” the nation was told. In his acceptance speech he stated that the USA owed Mrs Clinton “a major debt of gratitude”. Should it prove to be an example of the post-victory watering down of pre-election rhetoric that may occur then it could be a considerably more benign administration than we might have expected. This would be somewhat more palatable to world markets than might have been imagined, but not likely to please his supporters of a more right-wing persuasion. They voted for a “full-fat Trump” rather than a “Trump-lite”.

For the moment, though, he has made much of his protectionist views and this has not pleased the recent trading partners of the US; the past few administrations have trended towards increased globalisation and trade agreements. Mr Trump has firmly declared his desire to “tear up” the North American Free Trade Agreement (NAFTA) and was equally clear on his distaste for the current agreements with Europe. His pledge to “make America great again” may suit US domestic producers, but will do nothing to please those nations currently exporting, in great quantities, to the States. Increased protectionism invariably means the imposition of import tariffs and, subsequently, the tit-for-tat duties that tend to stifle foreign trade. One unlikely beneficiary that has already been noticed, however, is the Russian stock-market: the apparent fondness for President Putin seems to foretell an increased level of trade between Russia and the USA.

On to the likely effects of his less extreme manifesto pledges: he has made much of his plans to increase capital spending on infrastructure: this has already started to have an effect on commodity prices, and the share prices of such producers. However, such actions often lead to increased wage pressure. The voters will be happy about an increased standard of living, but this is inflationary and may lead to an increase in interest rates. Inflation and higher interest rates are a threat to bond markets, and we have already seen signs of losses in the capital values of US bonds. Whatever happens, there will be knock-on effects in the UK that will affect our investments and pension funds, so we’ll keep a keen eye on the goings-on.

In any event, what will be, will be. It will be a while before we see the full effects of the new regime, and longer before we know the full effect of leaving the European Union. In the meantime, whilst it seems a little early to wish readers a joyous festive season, and a happy and peaceful New Year, I shall anyway!

David Foot