Donald Trump has been elected, what next?
Trump
has won, so what happens now. The sun will come up tomorrow. Mums and Dads
still go shopping. Children go to school. Workers still go to work and business
continue to trade. So economically, nothing has changed and
the economic fundamentals of the US economy are fine and improving.
Social policies will change, as the Republicans have not only won the
Presidency but also the House and the Senate. In fact, the Republicans tend to
introduce very favourable business policies. Some of the policies will seem
strange to Australians (like winding back Obama care) but It is unlikely
Republicans Senators and Congressmen, no matter how much they dislike Trump,
will block his proposed tax cuts or pro-business policies.
Stock markets don’t trade on social policy they worry about economic policies
and very few saw a clean sweep for the Republicans in this election which means
a very pro-business government in the USA.
America, however will become more protectionist and more withdrawn. This was
the outcome regardless of a Democratic or Republican win. This may mean that
their foreign policy will become withdrawn with less direct international
interference. This may cause Australia to be drawn closer to Asia as trade
blocks deals like the TPP (Trans-Pacific Partnership), which pivoted on US
involvement, looks now likely fail. This could end up being good for Australia
especially as the UK will also be looking for new trading partners.
Don’t panic. Stick with your investment strategy. We know this is easier said
than done and we know it is time & experience that helps with this. We hope
the Raiz App can assist you in learning this.
The markets will now focus on the next move from the Federal Reserve which we
expect to be a hike in the December. Especially as the FED will now worry about
the possible Republican inflationary policies. But more on this in the coming
weeks.
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