Investment Outlook Post Presidential Election - Farringdon Group Market Outlook (Nov 2016)

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Information about Investment Outlook Post Presidential Election - Farringdon Group Market...

Published on November 21, 2016

Author: DuncanCameron6

Source: slideshare.net

1. Investment Outlook Post Presidential Election Political commentatorswere shockedbylastweek’sUSpresidentialelectionresult.However,markets have takenthe news largely intheirstride. While Asiansharesdroppedbyasmuchas 5% followingthe electionvictoryUSshareshadlargely recovered bythe endof the nexttradingday. Westernmarketsare nowlargelyhigherthantheywere before the result. Twoareasthat have seen dropsare bondsand emergingmarketequities.ThisisonspeculationthatTrumpwill substantially increase governmentspendingleadingtohigherthanexpectedinflationandthathe will increase trade barrierswhichwill affectemergingmarketexporters. However,we feel these threatsare overblownandpresentsome significantopportunitiestore-enter markets. Firstly, evenwiththe Republicanscontrollingbothhouses,Trumpwillstillbe facedbythe same Tea Party lobbythanhasparalysedthe US governmentforthe past6 years.While Trumpwantsto increase spendingonthe militaryandinfrastructure he will have atoughtime gettingfurtherdeficit spendingthroughCongress. Hisplanstocut taxeswill alsolikelybe heldupbythe Democratsinthe senate if he triesto cut social andwelfare programs. We don’texpecttosee muchif any changesto US fiscal policyanytime soon because of Trumps election. In termsof free trade the onlycountrylikelytosufferisMexico.While the UShasthe NAFTA agreement withMexicoithas little if anyotherfree trade agreementswithotheremergingmarketseconomies outside of the WTO. Trumpcoulduse presidentialpowersto pull outof NAFTA butthe overall effecton the global economyof NAFTA is fairly small. Certainly,the TransPacificPartnershipTPPisnow deadhoweverthat waslikelywithorwithoutaTrump presidencyandlargelyfactoredin.InterestinglyJapanhasnow firedawarningshotacross the bowof the USA by declaringitsinterestinjoiningthe Chineserival toTPPalongwithMalaysia. While aTrump presidencyislikelytosee anendtoNAFTA it isunlikelytobringthe international system of trade down. The big questionpre-occupyingthe marketsiswhatwill the Feddo.Expectationswere runninghighfor a fedrate rise before yearend.However,the effectof thiswill be hardonChina.Will the Fedwantto raise tensionswithChinaatthe exactsame time a new presidentcomesintothe job? GivenTrumps rhetoricaboutunfairChinese trade practicesafedrate rise couldfurtherexacerbate andalreadytense situation.

2. While Trumpwasthe Russianchoice forthe job,the Chinese were verymuchsupportingClinton.It seemslikelytousthat JanetYellenwill looktoholdoff foras longas possible before raisingrates. Ultimatelycurrentglobal marketsare onlyreallyaffectedbymonetarypolicyandDonal Trump’s electionmakesitlesslikelythe Fedwilltighten.Thisshouldstarttotranslate intohigherpricesin emergingmarketstockandbondsacross NovemberandDecember. For more informationandtofindoutour strategiesplease contactme directlyat dcameron@farringdongroup.com or+60 3 2026 0286 Licensed Labuan InsuranceBrokers: BS200861 This electronic messagetransmission contains information fromtheCompanythat may beproprietary,confidentialand/orprivileged.This documentshould only bereadby thosepersons to whom itis address andis notintended to bereliedupon by any personwithout subsequent written confirmationofits contents.Accordingly, Farringdon Groupdisclaims all responsibility and accepts no liability (including negligence) for the consequences ofany person acting,or refraining fromacting, onsuch information prior to the receipt bythosepersons ofsubsequent written confirmation. Ifyou havereceived this e-mailmessagein error, pleasedestroy anddeletethemessagefrom your computer. Any form of reproduction, dissemination, copying,disclosure, modification, distribution and/or publication ofthis e-mailmessageis strictly prohibited. FarringdonGroup is anindependentand International FinancialAdviser thatcan adviseon theproducts and services ofdifferent companies

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