Our Chief US Economist, Lewis Alexander, looks at how the economy and financial markets may evolve under President Trump.
A Trump Victory: The Bottom Line
Overall, there is a substantial amount of uncertainty over how the economy will evolve under a Trump presidency. Taken at his word, his unilateral actions in the early days of his presidency could be highly disruptive to the domestic economy and trade policies. Trump has stated that he would begin deportation of illegal immigrants and establish strong trade protections in the first days of his presidency.
Financial conditions are likely to tighten but it's unclear how long those conditions would persist. If financial conditions remain tight for a substantial amount of time, it could delay the FOMC's decision to raise rates in December. But if conditions reverse quickly like it did after the Brexit vote, the FOMC could raise rates in December and take a "wait and see" approach.
Between now and Trump's inauguration, it is also unlikely the Republicans would allow the Continuing Resolution (CR) to expire and close down the government with a Republican president waiting in the wings. The TPP would not be passed during the Lame Duck session.
Other policies that may be considered:
Cancel all federal funding to sanctuary cities and begin the process of deporting illegal immigrants
Lift all restrictions on domestic energy production (including the Keystone pipeline)
Propose a hiring freeze on all federal employees (with the exception of the military, public safety and public health) to reduce the federal workforce through attrition
Repeal and replace Obamacare
Build a wall on the southern border and enact sever penalties for breaking immigration laws.
Visit our Themes & Trades page for more insights on trading the election.