The shock election of Donald Trump as President of the USA yesterday caused initial market ructions although both the FTSE 100 and the S&P 500 recovered quickly. So should asset managers be worried?
Not according to Jeremy Leach, chief executive officer of Managing Partners Group. He anticipates that the dollar will take a tumble and US equities will trend lower before markets realise that Trump is less of a threat than initially feared.
“Going forwards, he will be surrounded by advisers and decision makers and I have a feeling he will turn out to be a much better president than the world currently assumes,” said Leach.
However, this optimism is in no ways universal. Michael Grady, senior economist at Aviva Investors is concerned that if Trump sticks to his pre-election rhetoric it could cause problems.
Grady said that If Trump’s tax and spending plans get stuck in Congress and he goes ahead with raising tariffs on imports anyway, it could have dire consequences.
“With elevated uncertainty, no fiscal boost and a potential trade war, the US could slip into recession, dragging the rest of the world with it,” said Grady.
“Trump’s victory could prove extremely destabilising and poses a material risk to global economic growth over the medium-term,” he added.
Pimco’s Scott Mather, chief investment officer of US core strategies, sees potential positives and negatives associated with Trump’s agenda.
“There is perhaps more potential for structural reform and a break of the gridlock in Washington, but counterbalanced by risks of a too-rapid forcing of trade adjustment,” said Mather.
As it stands, time will tell whether Trump’s rhetoric actually becomes reality. Although with his party controlling both the Senate and the House of Representatives, he should have less problems passing legislation than previous presidents who lacked their party controlling the legislative arms of the US government system.
©2016 funds europe
