I honestly thought the Democrats would cheat and put up more of a fight, causing more delays, but it seems they didn’t want Kamala either!
But to hell with that. I woke up real early Wednesday morning to see how the election was going, and boy, I have been smiling since.
The markets have moved strongly, and I think most of us are now relieved that the uncertainty is over.
The stronger dollar is putting pressure on commodity prices, and the correction we are seeing in gold prices, something we discussed last week, may last a little longer than some hoped. I am by no means a gold bear, especially longer term, but it will be a good market to hit on rallies over the short to medium term. What we need to watch is how Trumps efforts to stop the problems in the Middle East and Ukraine are accepted by the warring parties.
Continued dollar strength, against other western countries probably needs to be accepted. I know I took a hit when Kamala came into the race, but my overall opinion of what will happen if Trump wins is unchanged.
Whether and how much tariffs Trump puts on imports from Europe is debatable, after all he is a wheeler dealer. I think there will be some tariffs, because he rarely goes back on what he said. But he won’t want to make the mistake of damaging trade relations across the Atlantic too much. Hopefully, although they hate him, European politicians might see sense and reduce import duty on American products, and this will be better for everyone.
There can be no question that relationships across the Atlantic will be strained over the coming years. And I think this will be very damaging for the UK, with their newly elected Socialist government, who have openly ridiculed and attacked Trump over recent years (especially the newly appointed UK Foreign Secretary). But we have to hope Trumps love of the UK, is stronger than his dislike of Keir Starmer.
We now know who the winner is, and we know that he has the Senate and the Supreme Court on his side, so this time he will be able to enact the policies he wants, without the distracting threats of impeachment and imprisonment.
We have a few months until January 6th, and executive orders start to be signed, But I am sure one of them will say “Drill, baby, drill!”
This might be great for those exploring new sites to exploit, but over the longer term, it might not be so good for oil retailers.
I don’t care. Anything that leads to lower prices at the pump and takes pressure off inflation is fine by me.
That said, we are not out of the woods as far as inflation is concerned.
There is still a massive shadow of debt hanging over the USA, and with so many tax cuts promised, it’s going to be like walking a tight-rope, if the USA is going to cut taxes, pay-off debts, and invest in growth.
I am not sure about what Trump is going to do about kerbing inflation. Perhaps he won’t.
Trump made his money when inflation and interest rates were much higher than the targets our people have set over recent years. Indeed, many of us flourished financially during the Thatcher/Reagan years when growth and interest rates were much higher.
How this pans out is going to be interesting to watch, but whilst Trump has promised to lower inflation, it might not be the priority for him that many are relying on. That said, I am going to relish watching Elon Musk using an axe to cut down the size of the public sector!
For us investors and speculators, times will be good.
The road ahead is clearer and we can start taking advantage of what we foresee will happen with a more business friendly, less bureaucratic, Administration.
Of course, it will not be all flower and roses, and undoubtedly, no matter how optimistic we may feel, there will be shocks for the markets to absorb. That said, this election has relieved us of a lot of uncertainty, so all we have to do is take advantage of what the markets offer and feel good about increasing the size of our portfolio’s.
It’s early days, but if the Old Man is feeling positive, then the outlook must be good!
Onwards and upwards!
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