US Elections//Beyond the Market Euphoria//Trump 2.0 Policy Bingo Card

Donald Trump is on track to be both the 45th?and 47th?president of the United States, after a stunning comeback victory that has him on track to win both the popular vote and the Electoral College by a comfortable margin.

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Trump trades surged during the night, with Bitcoin’s rise acting as a proxy for optimism about Trump’s victory. Europeans woke up to a shock after initial reports highlighted high turnout and large numbers of young and first-time voters, normally positive for Democrats.

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The short-term implications are clear, and largely market-positive: a Trump victory boosts equity markets, as US corporates will benefit from lower taxes; the dealmaking pipeline will be strengthened in anticipation of a less-interventionist FTC, and key sectors such as Tech will rally.

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The future of the clean energy and ESG agenda, US-China relations, support for NATO and Ukraine, and relations with traditional US allies in Europe and Asia has become more complicated.

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The result is a boost for Israeli PM Netanyahu, will welcomed by the Kremlin and will be a boon to right-wing populist movements around the world. Whenever a winning electoral formula appears, it gets copied fast.

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Trump’s victory is the most powerful example this year of a political and economic environment that has been brutal for incumbents around the world and brought home the fact that inflation is political kryptonite.

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This lesson will not soon be lost on governments—growth is not enough if prices are high and wages perceived to not keep pace.

A silver lining to a clear Trump victory in both the popular vote and the electoral college is that there is no doubt that his opponent, Kamala Harris, will concede, and we will avoid a prolonged period of political uncertainty. After a bumpy year, this is a small blessing.

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As we have said in our research this year, the most important outcome for US elections for global business is a clear result and smooth political transition, and that indeed appears to be what has transpired. The machinery of US democracy has functioned effectively, and Trump has secured victory with a mandate—his support has exceeded 2016 and 2020 levels.

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We will leave it to pundits to debate tactics and strategy but underscore that the dividing lines in US politics remain bright along geographical, educational, and gender lines, with Trump’s strongest support coming from working-class men. This result will leave many Americans not only angry, but fearful.

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On a global level, there is no getting away from the fact that Trump’s victory will be transformational for both the US and the international system, with geopolitical and economic risks heightened. The international system becomes more fragmented as a result of Trump’s return, and the basis for international coordination reduced under a more transactional US foreign policy approach. We believe that investors should take Trump’s campaign promises both seriously and literally, and prepare accordingly.?Our Trump 2.0 Policy Bingo Card highlights in Blue the areas of increased geopolitical risk as we see them.

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What Happens Next?

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We are awaiting the crucial outcome of the Congressional races, with Senate control likely going to Republicans and we await results for the House of Representatives. We regard a divided Congress as the best outcome, both for markets and geopolitics, as it would provide a brake on policymaking and appointments.

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At this writing it is unclear who would serve in a Trump cabinet, given the flight of most of his previous advisers, but we expect Elon Musk and RFK Jr to feature prominently, and for loyal allies to be rewarded.

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The Flaw in the Market’s Euphoria

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The market's euphoria over a Trump 2.0 presidency contains a potential flaw: Trump's campaign promises are inflationary.?

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Damned if they do and damned if they don't. Can the FED continue its easing cycle, with substantial upwards pressure on federal debt???

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Damned if they do —? At today's FOMC, Markets are expecting a further easing of rates. Trump 2.0 will want to claim delivery of lower interest rates as a result of him being elected, and will likely be unhappy at this happening on a Biden/Harris watch.? Damned if they don't —?As all central bankers know, managing inflation is as much about managing inflation expectations, as reported numbers. In light of possible inflationary pressures — should FOMC guidance even suggest caution today about further rate cuts, Markets could well be caught offside. Moreover, if the FOMC does sound a more cautious tone, this could put the Fed in direct conflict with a future Trump administration, raising the frequency and intensity of calls to undermine the Fed’s independence. While the Fed’s independence may remain intact, even suggesting a reduction could have severe implications for sustaining the credibility of U.S. federal debt; especially if Trump’s policies push debt up another $7 trillion.

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This affirms our long-standing view that steeper yield curves are here to stay

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Additionally, Trump 2.0 may continue the Supreme Court's recent efforts to limit the powers of government agencies, potentially targeting the SEC, CFTC, EPA, and FTC.

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To discuss the implications further, register below to join our webinar today at 1:30 pm UK.

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All the best,?

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Tina

US Elections Rapid Reaction//Global and Market Implications

Fordham Global Foresight Webinar

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Join Tina Fordham and Martyn Brush following the U.S. election for a analysis of the results and their impact on global markets and investor strategy.

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Wednesday 6 November

8:30-9:15 am EST, 1:30-2:15 pm BST, and 9:30-10:15 pm HKT

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This exclusive Fordham Global Foresight session will examine the reactions to the election outcome and explore the potential implications for markets, geopolitical stability, and investment landscapes.

Click here to register.

Fordham Global Foresight's Views in the Press

Brussels is working to "Trump Proof" Europe. Tina Fordham on Bloomberg Surveillance

Shock Iowa poll showing Harris ahead of Trump puts ‘cat among the pigeons,’ Tina Fordham says // CNBC

Catch up on our latest newsletters.

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Read our most recent newsletters:?

• Halftime on US Election Day//What to watch for in the next 12 hours
• T-1 Until a Moment of Clarity on US Elections??
• US Elections Countdown: Signals/Noise and the Developments In Between