Business

Trump - what will it mean and what can we learn?

Donald Trump makes his acceptance speech in New York
Donald Trump makes his acceptance speech in New York Donald Trump makes his acceptance speech in New York

IN a world full of social media 'memes' it appears most weren’t expecting this result.

It didn’t surprise me that many found it surprising.

In this noisy world we often don’t get to read the correct data.

We were told by her Mrs Clinton's media sponsors, people were stupid - perhaps we didn't understand their pain. Some never will.

People are tired, sick of lies and corruption, and, the fact that 70 per cent of the electorate didn't trust Mrs Clinton, should have been a clue.

Mr Trump became a quick champion for their frustrations, for the families who just can't feed themselves and they showed that at the polls.

His opinions and actions have been deplorable but Mrs Clinton hadn’t realised how transparent she was.

The world appears to be rebelling now against the elite and their tax-free regimes with enforced austerity on others and this result has demonstrated that.

At 3am I sat looking at the dollar v the peso and could see what was going to happen. Watching all the Americans raising their voices knowing where it was going, I saw their anger and divide and thought - he needs to quickly speak and pull this country together or this will be a meltdown.

His speech was conciliatory and magnanimous from beginning to end. At 8.05am, UK markets turned north after a four minute downward spiral and have remained there.

Having sat right through it all, making notes of everything that was said, I was comforted. This could have been a chance to unleash the demons, the chance, Brexit-like to be able to tell whoever you want what you thought, but Trump grabbed it and calmed markets.

The country is divided. The world appears that way. People don’t talk to each other or communicate or learn. They have beliefs and sit with people with the same beliefs and others are threats to their beliefs.

Trump’s speech, without a script, polish or perfume, said exactly what I wanted to hear. He ignored the shouts for 'lock her up' and other aggressive chants and took me completely by surprise and world stock markets responded immediately.

He just gave everyone hope at last.

And it then transpires my questions on my notes were being answered. He has already put together his foreign team last Thursday. He is ready.

He thanked Clinton, explained they should heal the wounds between them and as “president of the people” walked off.

Markets rallied immediately - to my great surprise.

And what does that mean moving forward?

I think you can forget the rate hike in December in the US and rate hikes for 2017 will be lower too so the dollar is less attractive in that respect.

Trump is likely to be spending heavily on infrastructure plus a fiscal stimulus through tax cuts.

As government borrowing is therefore likely to rise you might therefore expect yield curves to rise too.

Remember also that 50 per cent of the US treasury market is foreign owned and they have been heavy sellers of this over the last six months.

Trump wants to roll back Nato spending. His reason, he can spend that money on infrastructure and employing American labour.

On foreign stocks, Trump opposes the horrible trade deals such as the Trans pacific partnership and the TTIP trade deal. This is a global winning decision but will hurt those corporates who were rubbing their hands with glee.

Trump is the enemy of the banks. He knows the system better than most and is capable of playing with them.

He says, and it’s a great idea, that he would like to rebuild the economy in this positive way, to have the disenfranchised working and rebuilding the country and using the money used above, more wisely.

Expect therefore to see a greater focus on domestic led activities and companies in the US at the expense of free trade and globalisation which appears to be battered from all sides.

However, and it is a big however.

Consider we have a referendum on the Italian constitution next month. Next year we have elections in France and Germany.

The UK and USA do not have the monopoly on disgruntled voters and all of this could have a very profound effect on the eurozone project and euro.

A Le Penne victory could point straight to the Frexit and that would probably be the end of the eurozone.

:: Peter McGahan is owner of Worldwide Financial Planning