Friday, December 9, 2016

Trump’s Impact on the Global Economy

Yes. Yes. Trump won. There is still a little shock left in the world, but for the most part liberals are finally falling in line and preparing to deal with the regime change. We have examined a number of impacts the election alone has had, noting some of the largest economic shifts of the year, despite the fact that absolutely no policy can change before mid-January.
Continuing that trend, this letter will focus on what the short-term impacts of the election has had on the global economy and use those numbers to predict where that will push everything over the next four years.
Currency
The USD is currently at a 13-year high. This run is built entirely on anticipation of new policies. As it becomes more likely that Trump will be able to push infrastructure spending and at least some tax cuts, expectations for a surge in U.S. GDP growth make the greenback a safe bet.
On top of those expectations, a stronger U.S. economy is sure to be accompanied by a Fed hike, and that only bolsters the value of U.S. treasuries farther. When value makes a large shift like this, the redirected money has to come from somewhere, and in this case, it is coming out of emerging markets. Malaysia, Indonesia and Mexico are all experiencing steep drops in the value of their currency. The Yuan continues to be floated by the People’s Bank, but the long-term outlook is the same.
Ultimately, emerging markets are quickly becoming risky investments. This will probably strengthen Trump’s position on repatriating U.S. cash and renegotiating trade deals, which we’ll look at in more detail in a minute.
The other important note is that even the most stable currencies, namely the Euro, are falling to the dollar. This isn’t inherently good or bad, but the trend will help frame the other shifts that have happened, and it will help us anticipate changes to come.

http://www.wealthauthority.com/articles/trumps-impact-on-the-global-economy/ 

No comments: