Tuesday, 15 November 2016

Where to from here with your savings and investment dollars?

Credit: Luis Gomez
Whilst the world adjusts to the new maverick president of the US, the first thing we should understand from both Brexit and the Trump victory is the silent majority within the Western world are rejecting globalisation and free markets because they feel as though their national identity is being lost, they have less control on immigration and jobs are simply harder to get.

With Donald Trump being elected against this backdrop what can we expect from his government (albeit with compromise or watering down, on many points):
  1. Monetary management: A reduction of taxes, less regulation and an increase in infrastructure spending. The implications: short-term i.e. the next four years, market growth and profits should be positive
  2. Interest rates and the Fed: We can expect the Fed to begin to lift interest rates. The implication: continue to reduce exposure to fixed interest sector
  3. Deporting illegal aliens: Trump has already indicated that of the 11 million estimated illegal immigrants, they will focus on deporting 3 million. No real indications for international savers and investors.
  4. The building of a wall along the Mexican border. This will be difficult for Trump to push through Congress. Very difficult to implement. No real implications.
  5. International trade agreements falling apart: This will be the one to watch. Much of Trump's campaign was on how current trade agreements disadvantaged the US. NATO (The North American Trade Organisation) and the impending Trans Pacific Partnership (TPP), were both criticised by Trump. It is too early to give an assessment as yet, however, it is interesting to note all remaining parties are already meeting to discuss how to continue. implementation without the US. At the moment it would appear to not have too much influence and Asia except for emerging countries should the TPP not be implemented at all.
The above are general market comments only. If you would like more detailed advice on what you should do with your financial products and investment portfolios that sit within them, we recommend you make contact with a Just Service adviser.

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