Trumponomics
Editorial: The US election result should not really have come as a surprise to UK investors who experienced the Brexit vote.
Take a populist who has the funds and plays the media as well as Trump; the people will follow, hypnotised – presumably to then be even more disappointed, although in the past it has taken wars to get to that point. Democracy is not without some serious flaws, it is just that so far none of the alternatives have been proven to be any better.
Stock markets got wobbly in Asia following Trump’s election win, but overall it’s not been the great disaster some had predicted.
In many ways the reaction by markets was positive – mainly building on the assumption that Trump will follow through on his campaign promises of expanding infrastructure building, increasing defence spending and cutting taxes.
Some have called him “a Keynesian on steroids”. Others have said that in reality and in business, he is more reasonable than he lets on. Whatever he turns out to be, investors are certainly anticipating a lot.
JPMorgan Asset Management’s chief market strategist for Europe, Stephanie Flanders, noted that Trump’s promise to ‘put America first’ and go back on free trade agreements means investors might want to look to the US first as well when deciding where to put their money, as US domestic investment could give a boost to growth.
US equities have already seen new highs as a result, with financials and pharmaceuticals the biggest winners, the FT reports.
But pension funds will not be fazed by the possibility of a new world order, being there for longer than many a government around the globe, as Angus Peters’ blog finds.
Closer to home, infrastructure is also a topic, as our case study about the Merseyside pension fund finds, and no less politicised than across the pond, although the direction of travel is in a sense opposed to Trump’s, with government trying to more or less outsource investment to pension schemes.
But the expectations placed on infrastructure investment might be overblown, and schemes could end up realising that the asset class does not heal all of the wounds inflicted by low gilt yields.
Sandra Wolf is editor at Pensions Expert. You can follow her on Twitter @SandraCWK and the team @pensions_expert.