Hail to the Chief

America’s next President, Donald Trump

Like many I’m sure, this is going to take some time to sink in, but the people of America have voted, narrowly, to elect Donald Trump as their leader for the next four years. This has defied the polls, betting markets, financial markets and popular opinion, but as the Brexit vote in June showed, the unexpected does happen.

He is clearly a man with many personal flaws; his views on women, immigrants and religious minorities are misplaced at best and abhorrent at worst. That said, Mrs Clinton was hardly untarnished either with the email scandal refusing to go away. As the campaign dragged on I felt sorry for the American public; for out of 300 million Americans, these two were the best candidates for one of the most powerful positions on earth?! The campaign was ugly, brutal and a sad advert for democracy across the world from one of its greatest advocates.

For all his flaws, for many voters, his one redeeming feature is that he is the antithesis of a politician.

Given the lack of any real detail in terms of policy from Mr Trump, excepting his promise to build ‘The Wall’, have half the country really voted for his vision of America? I expect the deep divides been Democrats and Republicans have led many supporters of the latter to hold their nose and vote for Trump, as they could not bring themselves to vote Democrat, or especially for Hilary Clinton. Others, as with the Brexit vote in the UK, I imagine, simply voted for change.

Whether this would be positive or negative, those who felt disenfranchised or left behind in the wake of globalisation probably felt things could not get much worse and therefore a vote for Trump was a protest against ‘the system’.

For all his flaws, for many voters, his one redeeming feature is that he is the antithesis of a politician, something he proved time and again during the campaign. The irony is that the billionaire is a prime example of the elite that many are revolting against. Still, the American dream is such that extreme wealth does not alienate you from ‘ordinary folk’, for anyone can become a billionaire in the USA. I’d argue that inheriting a real estate from your father probably helps however.

Looking ahead

The votes are in and on the 20th January, 2017, Mr Trump will be inaugurated as the 45th President of the USA. So what will a Trump presidency mean for the US and the world? As mentioned, the lack of any real policy detail means that it is hard to tell. The concerns are that his rhetoric suggests America will turn more isolationist and retreat from foreign affairs which could worsen the situation in the Middle East and leave Chinese aggression in the East China Sea unchecked. His anti-immigration views and talk of the Wall could affect the vibrancy of the US economy and deter those who have skills to bring to the US. The promise to return jobs from abroad raises the possibility of protectionist measures which would harm the US economy and set a dangerous precedent of retaliatory measures being adopted by global markets.

The positives are that although he may not do much for the economy, financial markets should benefit from his pro-business and anti-regulation stances. His disdain for the environment and climate change is deeply worrying but in a financial sense will be a boon to natural resource industries.

As well as Trump’s victory, it was also good news for the Republicans in general who kept control of both the House and Senate. Unlike Obama who was hamstrung by a Republican controlled Congress, Trump should be able effect change given the one party rule in Washington – for the next two years at least.

The fact that any real change requires the approval of Congress is also a reason for calm when considering a Trump presidency. The party has shown they are not afraid to disagree with their presidential nominee and when he is in power they will hopefully provide a challenge to some of his policy whims. His plans for widespread tax cuts are likely to be watered down by a fiscally conservative Republican party which is good news for America’s finances.
In terms of wider impact, this remains an unknown. Initial reaction in the markets to a Trump victory during the night were negative but many of these losses have been reversed and his victory speech went some way to soothing investors’ fears; he almost sounded humble.

So, it remains to be seen; assuming the campaign was all rhetoric and bluster to appeal to the more extreme voters and he really is a more measured, diplomatic businessman, it might not be such a bad choice. If he is actually as self-centred, insecure and bad tempered as he appeared in the campaign and during his public life, the US and the world has a problem.

With elections throughout Europe, in particular Germany and France, coming up, 2017 promises to be an interesting year.

As ever, if you have questions or would like to discuss the impact of these events with us, do please feel free to contact us.