The world was watching as Donald Trump was re-elected as the 47th President of the United States. His victory in the latest US Election marks the beginning of what I would call Trump 2.0—a new era that will have significant implications for policy, the economy, and financial markets. In this article, I’ll share my initial analysis of what this means for investors. I used the word “initial” because the market is ever-changing.
The world is unplannable, unpredictable, governed by the hidden tides of chaotic factors and buffered by butterfly wings.
To begin, we need to understand why investors pay so much attention to the US election, probably more than the one in our own country.
When the US Fed or Government made policies, they didn’t really care about the rest of the world. They don’t care a rapidly rising interest will cause some companies or even countries to go bankrupt; they don’t care the trillions of newly printed US dollars will cause asset bubbles that will burst badly eventually.
The fact is that the ripple effects of any change in the US will be felt globally. For Singapore, with its open economy and strong trade ties to the US, the impact of his presidency will be significant. In fact, you can see from the chart in the later part of the article, that Singapore’s STI had a negative performance during Trump’s first term.
For the man on the street, here are the areas that will affect you even if you are not investing:
Interest Rates: Trump’s Presidency will influence global interest rate movements, which will directly affect your mortgage rates, deposit interest rates, and even your Treasury bill (T-bill) and SSB returns in Singapore.Inflation: Trump’s policies aimed at stimulating domestic production