Assessing the impact of Donald Trump with risks and opportunities for 2017
We take a look at the important drivers that traders need to be aware of for the 2017 market outlook. Donald Trump is certainly a key aspect but there are also other factors that investors need to be aware of.
2016 has been an incredible year of shocks and upsets. First Brexit, with the UK voting to leave the European Union and then Donald Trump being elected the 45th US President. 2016 will go down in history as the year that western politics changed.
Global financial markets have been experiencing a wild ride of volatility and 2017 seems to be set up for another year of geopolitical turbulence. In this report that looks towards 2017, I’m going to discuss the impact of Donald Trump and what he means for financial markets. I will highlight some of the political issues in the Eurozone and I’m also going to look at some of the risks and opportunities that might arise in 2017.
THE BIG ISSUE: Will Trump deliver on his promises?
I see Trump as having two factors:
- US Domestic – fiscal expansion, tax cuts, growth and inflation driving
- International – will a protectionist/isolationist Trump drive a negative outlook on global growth and outweigh the benefits of his domestic fiscal expansion?
Spending – Trump has proposed $1 trillion of spending on new roads, bridges and transit systems to improve the US infrastructure system. $1trillion of fiscal expansion sounds a lot but much will be coming from the private sector.
Trump believes that $137bn of tax credits will encourage the investment by private companies which would get 82% tax credit to put money into investments.
He is also looking to encourage the repatriation of $2.5 trillion of cash held by US companies overseas –by encouraging them through a tax cut from 35% to 10% which would again be offset by the 82% tax credit for investment…