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Hillary vs Trump: Volatile Times Ahead?

Updated on November 4, 2016

In the run up to the 45th US President elections, there lies a great deal of uncertainty about the electoral outcome. In July earlier this year, Hillary Clinton made history when she became the first woman presidential nominee of a major US political party. On the flipside, his political adversary, Donald Trump is an animated character, has some unorthodox ideas, possesses an alarming temperament, shows absolute disinterest in learning public policies and sets up a rather perfunctory political campaign.

Emotions are running high and now all eyes are on Tuesday, November 8th when the voters will cast their votes to pick the head of government. A win for either of the candidates is expected to move the securities market to a great extent and make things uneasy even for the most seasoned investors. Let us have a quick look on some of the most evident impacts, based on the analysis of their electoral campaigns and the series of presidential debates.

1) Stock Market

Hillary Clinton is a known administrative player whose policies are expected to be in line with the current administration. With close ties to the Wall Street, she has managed to garner a strong support from top executives. She has received astounding donations from some of the corporate leaders, which gives off an impression that she is quite competent on economic issues, prepared to ease regulation and boost financial services. In numbers, she received twice as many donations from Fortune 100 CEOs than President Obama did in 2012. However, on the other side, Donald Trump not receiving any support from the Fortune 100 companies, with some CEO’s openly criticizing his policies speaks volumes about the wave of political risk he carries with himself.

When it comes to the energy sector, Hillary and Trump think along different tangents. While Hillary is a strong promoter of energy efficiency and supports renewable energy sources, Trump on the other hand is a vocal supporter of traditional energy sources like Coal. However, the performance of the energy sector will largely be determined by oil prices, which is predicated on the global demand and supply dynamics.

Both candidates have indicated a strong desire to boost infrastructure. Trump has asserted a pressing need to rebuild crumbling roads and bridges, while Clinton also has similar plans to push infrastructure spending. In all likelihood, Trump’s trade policies and his desire to bring back jobs from cheaper offshore location to the US could adversely impact technology, healthcare and agriculture industries, and thereby pushing the incremental costs to the consumers.

2) Bonds, Commodities, and FX Market

Donald Trump’s fiscal plans, specifically corporate tax rate cut from 35% to 15% will sharply increase deficits and the debt over the next decade. This will lead to a steepening of the yield curve and wider credit spreads.

Trump’s perspective on foreign affairs and the potential implications of his trade policies are likely to put a downward pressure on USD versus some of the other major international currencies. The impact of a Clinton win will likely be less severe as she is quite experienced, has previously served as the secretary of state and belongs to the same party as the incumbent President.

Gold, on the other hand, is expected to be on the rise, as the investors would run to safety, in an environment which will likely be characterized as uncertain in the near term.


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