Markets pricing Trump victory

The return of Donald Trump to the White House has sent shockwaves through global markets, with many investors trying to decipher what this means for the future. Michael Bolliger, Chief Investment Officer for Emerging Markets at UBS Global Wealth Management, shared his insights on how the emerging markets could be impacted by Trump's victory. Bolliger reassured viewers that there is no need to be scared from an emerging markets perspective. He emphasized that the impact of Trump's victory will vary depending on the specific market. While countries like South Africa may be less exposed, others like China and Mexico could feel the effects more acutely. The immediate aftermath of the election saw the market react in a predictable manner, with investors quickly pricing in the news. Bolliger noted that while some may have taken profits on their trades, the real indicator of market sentiment will be seen in the coming days and weeks. One key point Bolliger highlighted was the overwhelming nature of Trump's victory. With control of both the Senate and the House of Representatives, a significant level of uncertainty has been removed from the market. However, he cautioned that this does not guarantee smooth sailing for Trump's policy agenda, as the checks and balances in the US political system still hold weight. Looking ahead, Bolliger discussed the potential impact of Trump's proposed tariffs on various countries, including South Africa. While the immediate effect may be negative, he suggested that over time, the impact of these tariffs could fade as trade routes adjust. In terms of South Africa specifically, Bolliger pointed to concerns about the fiscal impact of Trump's policies and how they could affect inflation expectations. This, in turn, could influence the Federal Reserve's monetary policy outlook, which would have ramifications for the strength of the US dollar and international investors' perception of the South African market. The conversation shifted to Federal Reserve Chairman Jerome Powell and the potential implications of Trump's presidency on US interest rates. Bolliger acknowledged that the Fed would need to closely monitor Trump's policies and their impact on growth and inflation. While he did not anticipate immediate changes to monetary policy, he suggested that a gradual adjustment could be on the horizon. In conclusion, Bolliger hinted at the possibility of a 25 basis points cut in interest rates both in the upcoming meeting and in December. He underscored the importance of data dependency and the Fed's mandate to balance inflation control with full employment. As investors brace for a period of uncertainty and adjustment, Bolliger's insights provide a glimpse into the complex interplay between politics and economics on a global scale.