Good morning everyone! Well what a year.
First there was the Brexit result, then our own election where we have seen the Senate effectively being influenced by Independents’ and minority parties and now Trump. So what effect is this going to have on your investments? Jamie Nicol has provided a summary below where he has concluded that there should be minimal effect compared to the Brexit result because “ we are not dealing with a leading nation having to unravel a complex economic agreement” which is an important point.
What is also important to note is that the US Congress introduces and passes laws and Trump is going to have to mend a lot of bridges before he starts to implement any of his election promises. The next point to remember is that the Federal Reserve controls Monetary Policy in much the same way that our own Reserve Bank operates in Australia. The only difference is that the Federal Reserve is made up of 12 Reserve Banks within the US, a Board of Governors and a number of Advisory councils. Its main function is to maximise employment, stabilising prices and inflation and finally moderating long term interest rates so again if Trump is going to have any influence on the economy he is going to have to work with a non-government independent body that has is incredibly experienced determining the global financial effects of their decisions.
Now from my own personal point of view, Trump will surround himself with the best possible political minds he can possibly find so that he can deal with Senators, Congressmen and the Fed Reserve. I honestly think we will see a very toned down version of Trump now that he is President compared to what we have seen over the last two years and we will see some changes to some of the election promises he has proposed. At the end of the day, Trump is a professional negotiator and his election slogan was to “Make America Great Again”, so if he is able to get the right political advice along with introducing policies that stimulate the economy and create growth, well he could potentially do just what he set out to achieve and actually make America great again.