US markets have reacted positively to Donald Trump’s re-election as US President, much as they did in 2016. Once again President-elect Trump ran his campaign on a ticket promoting an ‘America first’ agenda. Back in 2016, expectations around these policies – such as deregulation, a tougher stance on China and corporate tax cuts — led the S&P 500 to post significant gains in the first 100 days after the election. A similar pattern seems to be taking hold this time too. Refresh this chart in your browser | Edit the chart in Datastream Speculation about the prospect of looser financial regulation, a

Refresh this chart in your browser | Edit the chart in Datastream The choice between Donald Trump’s nativist America-first policies and a first female US President offering a large continuation of Bidenomics is a consequential one, not just for American voters but for the world. The US election candidates hold strongly diverging opinions on international engagement — on Russia-Ukraine, Israel-Palestine, climate change, and on the ways and means of US protectionism — which are apt to influence the rest of the world’s relations with the US. On trade, Mr Trump has suggested universal, minimum, 10% tariffs on imports, while Kamala Harris has

The FOMC meets next week, faced with an economy facing downside risks to the labour market but still-firm inflation. That they will cut interest rates is not really in question. The Chair widely flagged such a move last month, noting that “the time has come for policy to adjust”. However, he noted that the “timing and pace of cuts” will depend on an “evolving outlook” and the “balance of risks”. While there have been clear signs of labour market softness, this week’s inflation reading was a reminder that upward price pressures persist. The fed funds rate in 2025, which is

Even with everything that the pandemic had to throw at the economy, the four-year electoral equity cycle, whereby the fourth year of the presidential term delivers the highest returns while the mid-term year is usually the ‘sweet spot’ in terms of cheapness, seems inescapable. Markets have a lot to digest in 2024, with the potential ramifications of an uncertain presidential race topping the list. Labour markets are also nearing peak conditions, with some indicators suggesting a slowdown in hiring. However, the US equity market has been exhibiting impressive second semester momentum so far. Despite some signs of slowing economic growth,

Refresh this chart in your browser | Edit the chart in Datastream Coincidentally, just a week after President-elect Joe Biden was confirmed the winner of the US election, a new trade bloc was announced that is likely to influence his overseas policy.  Covering nearly a third of the global economy, the Regional Comprehensive Economic Partnership (RCEP) encompasses the members of ASEAN plus China, Japan, South Korea, Australia and New Zealand, making it the world’s largest trade bloc. The deal stipulates tariff elimination on 90% of goods, although the extent of this is not as grand as it seems, as many of the

The world looks rather different than it did at the start of the week, after news emerged of a potentially game-changing coronavirus vaccine and a winner in the US presidential election. Pfizer and BioNTech told the world’s press on Monday that their coronavirus vaccine was 90% effective in initial results. That is nearly twice as effective as vaccines against influenza, which are estimated to work in 40% to 60% of cases. If the early findings hold good, this is excellent news, and it duly triggered bullishness in equity markets, with indices gaining around the world. Refresh this chart in your

The World Renewable Energy index has outperformed the MSCI global equity benchmark by more than 100% so far this year. Should he win the election this week, Joe Biden has signalled that he would rejoin the Paris climate change agreement and has earmarked $2 trillion towards spending on climate-related projects. These factors help explain why there has been a strong correlation between Biden’s polling and the relative performance of global renewable energy stocks. But the correlation between these two series only firmed up in in October – there was little relationship between the two earlier this year. Incoming legislation in

In today’s News in Charts we turn our attention to the macroeconomic and financial market consequences of the upcoming US election. There are a range of possible outcomes, including different permutations in the House and Senate. Overall, we judge that a Biden win would be consistent with increased fiscal support, and higher GDP growth (real and nominal), despite an anticipated increase in taxes. By contrast, any Trump victory is unlikely to come with Republican control of the House and would be associated with reduced fiscal measures. Foreign policy would be the area to watch during a second Trump administration. If

As the probability of a Biden win and a Democrat clean sweep has increased, markets have responded by moving out of US oil, gas and coal stocks. Biden’s spending plans are directed more towards cleaner infrastructure and renewable energy sources than his Republican opponent. Changing investor sentiment is shown by the outperformance of US alternative energy stocks, although this sector has also benefitted from its exposure to the tech rally. The underperformance of traditional energy stocks relative to the S&P500, in spite of the partial recovery in oil prices since the pandemic-related fall, provides more evidence that investors are no

Defense spending is an integral part of the U.S. budget.  Since 1950, consumption and investment on national defense has increased from $20 billion to of $877 billion in 20Q2.  This represents a 5.5% compounded annualized growth rate over the last 70 years. While gross spending has increased over the long-term, it appears that the rate of increase is largest during a Republican Presidency.  Defense spending has substantially increased over the last two Republican terms (excluding current term), doubling during the 1980s and 2000s.  Conversely, defense spending has remained stagnant during the prior two Democrat campaigns. Exhibit 1 below highlights defense

In our latest quarterly forecast, finalized over a month ago, we took the ‘out-of-consensus’ view that, on balance of probabilities, a victory for Donald Trump would lead to faster US economic growth than the alternative. But the speed at which equity investors seem to have priced in this outcome, which we dubbed ‘Trump Lite’, has been remarkable. Have investors got ahead of themselves? The answer hinges on how US fiscal and trade policies evolve under the new administration. The bottom line is that, while our central view is now a period of quite robust US growth, a lurch towards greater

2016 has presented huge macro-related challenges for investors. Richard Dunbar, Investment Director at Aberdeen Asset Management, presents his summary of how we should interpret these events. He also reviews the potential market impacts of the US election results and outlines what investors should consider as they we head towards 2017. Richard is speaking with Jake Moeller, Head of Lipper UK & Ireland Research at Refinitiv on November 16, 2016. About Richard Dunbar Richard is a member of Aberdeen’s Economic and Thematic Research group.  He joined Aberdeen in 2014 as part of SWIP heritage where he had been part of the Investment