For the second time in less than 6 months, we have seen a low probability event become a reality - Mr Donald Trump’s Presidential victory comes on the back of the Brexit vote and the emergence of similar nationalist movements across Europe.
The Republicans will control the White House, the House of Representatives and the Senate (for at least the next two years). The path is clear for change. In this context, it’s worth considering that the US President’s powers are held in check given the separation of executive, legislative and judicial powers.
While the Republicans control both Houses, it will remain difficult for Mr Trump to implement his more extreme policies given the opposing views within the Republican party. From an economic perspective, the US economy is strong and fiscal stimulus is high on the agenda which is likely to provide further support.
Our concern in the medium term remains that this outcome hot on the heels of Brexit will further encourage the nationalist movements around the world, particularly in Europe where the EU remains fragile. This uncertainty combined with the “Trump factor” supports our view that we will continue to experience volatility in the short to medium term.
It is important investors do not get caught up in the noise and volatility, but rather stay focussed on company fundamentals and their long-term investment strategies and the opportunities that volatility may bring.
We continue to carefully monitor markets and stand ready to participate should any attractive investment opportunities present themselves.