TRUMP victory & it’s impact on Global Financial Markets

The people of the world experienced a shocker as they woke up on Wednesday morning, the 9th of November 2016 by witnessing the unexpected HILARY loosing to DONALD TRUMP.

The policies of this new leader of world’s richest democracy are uncertain & unpredictable. In his victory speech he emphasised on a $500 billion infrastructure led investment growth for the economy.

This shall have enormous futile impact on global economies except the United States.

A fiscal stimulus as big as $ 5 trillion can revive global commodity markets except crude & create just the inflation required for long anticipated FED interest rate hike. This would create additional jobs making every statistical aspect hunky-dory for further rate hikes. This would bring GDP growth back to the world’s largest economy.

Shouldn’t this be good ?

That’s what most of the experts would say. There is a general presumption that if US  does well India fares well too.

Well, have a look at this then..

A FED rate hike would mean a stronger dollar & increase in US T-Bills yield. This would result in large outflows from emerging markets like INDIA who is trying to bring in FDI. Rupee will be weaker, RBI will have to intervene.

Further the constitution of United States has granted power to its president to take trade decisions (without a majority in parliament) for upto 60 days & levy an import duty of 40% flat on all goods & services from any country.

If trump makes a move, China & Mexico are likely to be his immediate targets. This will result in lower Chinese exports hence a slowdown in the second biggest economy which is sitting on a debt pile which if rises any further can cause worst ever global recession.

Globally most banks will go bankrupt, people will be jobless & their wealth will be less then half the value of what was before as most of their investments will find no/very few buyers. There will be hunger/theft, poverty levels will rise.

There is one community which will benefit if such uncertain event takes place & that is the ones having enough exposure to commodities like..

GOLD / SILVER / PLATINUM / DIAMOND..

Just hope the actions of this newly elected US President do not turn out as he portrayed to win his votes.

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Published by

Analyst Dave

A student of Charted Accountancy & THE MS UNIVERSITY OF BARODA. My interests are mainly in the field of equity research. Keep updated for further research material.

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