Firstly, I don’t consider Trump’s victory to be very surprising. The pre-election polls were very similar to the polls released just before the Brexit voting: Both parties were getting closer, even the more “rebellious one” got to lead for a while and at the end, both of their preferences dropped. It could be a warning for everybody that the seeming outsider and bigger rebel has more chances than it seems. In summer it was Brexit and now it’s Trump.
Trump used to be often compared to Raegan. Which after all, wouldn’t be such a bad choice because Raegan really soundly kick-started the American economy in his times. Except that it is very significant misunderstanding and the financial world knows it. Trump is not Raegan. Trump is actually very badly readable when it comes to the economy. In reality, nobody knows what to expect from him on the economic field. If the America was more or less divided in half until the last minute, the financial world saw it black and white: Trump was considered to be a disaster. And they have specific reasons for that.
His “program” is more like a collection of individual slogans which are not connected by a unified economic philosophy. For example, we know that he would like the liberalization of domestic American conditions (in form of dramatic reducing of taxes) but at the same time, he is talking about protection of foreign trade (in form of duties and quotas), which would probably start in case of its implementation a business war. And that logically doesn’t really go together.
The most visible movement can be seen on stocks in the future. And the fact that stock are growing NOW says nothing about the future – it only show that the market doesn’t know how to read the situation. In past, I wrote here that there are more and more dark clouds appearing above the stock markets. From the slowing China, through the uncertainty how will the signal interest rates in the USA develop, to for example the possible victory of Trump. We can not consider Trump to be the reason for the market’s drop; but we can understand him as an impulse, detonator, last drop which will make the glass of stock markets overflow. The possibility that the clearance sale which was happening on the stock markets in past few days could be of long-term nature is growing a little bit.
However, this all will be true in
the case that Trump starts fulfilling what he has promised. Once again, we need
to understand his un-readability. All these trends mentioned can fall apart
like a house made of cards in case that the upcoming Trump’s words suggest that
he won’t be that eager to fulfil his pre-election slogans.
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