The World in shell shock this morning over the results of the US election. Results so far show Donald Trump having won 278 seats, with several states yet to formally declare their results. Hillary Clinton has mad the fated telephone call to concede defeat, and Donald Trump has addressed attendees of his victory rally.
There was a notable change in the rhetoric of his speech. Gone were the insults and derogatory comments. Instead phrases such as:
“I pledge to every citizen of our land that I will be president for every American. And that is very important to me,”
“For those that have chosen not to support me in the past, of which there were a few people, i’m reaching out to you for your guidance and you help so we can work together and unify our great country.”
“I expect to have great, great relationships” with other countries, says.
“No dream is too big; no challenge too big. America will no longer settle for anything less than the best. We must reclaim our country’s destiny and dream big and bold and daring.
“I will always keep America first.”
Investors around the world have been wrong-footed by the result, which strongly echoes Britain’s referendum earlier in the year which resulted in the Brexit scenario which is currently playing out. Mr Trumps win has been further amplified by a Republican sweep of the Senate and House of Representatives, putting the Republican political party firmly in charge for the next four years.
There have been sharp swings in the financial markets as investors struggle to come to terms with the result, including:-
- The Mexican peso was off 7.8 per cent after initially tumbling 12 per cent, its biggest drop since the country’s 1994-1995 devaluation crisis.
- The price of gold shot up over $50 at one point to $1340, though it has settled down since to $1306.
- The US dollar fell 2.5 per cent against the yen 1.5 per cent against the euro.
- S&P 500 futures were down 3.4 per cent.
- Treasury bond yields tumbled as investors sought out safe assets and marked down the chances of a December rate rise.
So why did Trump defy all predictions and nail a victory.
The battleground states of Ohio, Florida and North Carolina went to Mr Trump as voters turned out in their droves, dominated by Trumps mainfollowing, white males, predominantly without a university level education. This group is an angry one, and one that is prepared to take action as they turned out in their thousands.
It could well be similar to Brexit, when those who wanted the opposite result were so confident of a victory that they didn’t bother voting. If the voting turn out is less than 60% there is a strong case for this.
Clinton suffered significant defeats in the Rust Belt of America as victims of the loss of manufacturing jobs voted in line with Trump’s “Make America Great again” campaign. When people are feeling helpless, they vote for change, and they vote with righteous abandon
Being an Outsider
Donald Trump came from no political background. He ran against both the Democrats and the powers within his own party. People love an outsider, especially a brass and ballsey one. Mr Trump proved to the people that he would act independently and not pander to the rest of his party, and this ballsey approach ha been rewarded, both in the primaries and in the election itself.
Trump’s Campaign played out
Mr Trump’s campaign followed a similar rhetoric to his personality. Against the grain, brash and unpredictable.
He held rallies, using the crowds momentum to obtain voters rather than carrying out door to door calls.
He took on each attack and rolled with the punches, outright denying things he had said previously that showed no weakness. Fine it showed he lies, but the fact he was prepared to do this showed strength in his convictions.
He travelled to states like Wisconsin and Michigan against advice that he wouldn’t win votes there.
Where do we Stand Now?
Markets are going to be jittery at Trumps every move from this point onwards as there are many questions on peoples lips
Will he destroy relationships carefully cultivated with other countries?
Will he shun China and embrace Russia?
Will he shun globalisation, turn from EU trade partners and tarnish East Relationships to focus on “making America Great again”?
I think this can be said, I you thought the craziest think that could have happened in 2016 was Brexit – you have just been Trumped.
Are Shares still safe
Personally, I think the world will go on, and I think if you have already considered a Trump victory when revising your portfolio over the past few months, you’ll be fine. I’m still confident in the positions of:-
I will be revising my research notes on these stocks over the coming weeks, so follow Risky Bear on the home page to see the latest when it is released.
What Company do you want Risky Bear to research and report on next?
Whilst I intend to researching companies in my own time and in an order determined by news and events, I am more than happy to take requests from readers. If you wish me to research a particular company, let me know via the contact page.