First Brexit, Now Trump; Welcome to the Twilight Zone
First Brexit, Now Trump; Welcome to the Twilight Zoneby Naeem Aslam
A cloud of darkness is sweeping across the markets today as Trump celebrates his new position of being the world’s most important leader. The markets are quaking with the fear of the unknown. As the core American values, which we have relied upon for many many years, come under threat due of the views which Donald trump holds, there are so many questions which need to be answered and this is creating turmoil in the market.
(Mr Trump’s values go against the very core of American history and this has raised many eye brows overseas. Known as the melting pot, this is a country which has been built by the blood, sweat and tears of migrants. It is a land whose policies are geared towards the idea that anyone can make it in America. Yet today, this core value is in grave danger of being erased from the fabric of the US.)
The question which matters the most for the markets is how the next 100 days will pan out under Mr Trump's presidency and most importantly if he will maintain his stance on trade and immigration policies. Is America about to enter a political thunderstorm that will wreak havoc on both its domestic and international fronts? Generally, politicians do not pay heed to what the candidates say during their campaign process, and this will be the intriguing. A man who became known for his TV catchphrase, “You’re fired!”, his plan to fire Janet Yellen from her position will not be popular with the markets. Dark clouds also linger over his barbaric views towards other countries which could disturb the peace.
The previous price of gold is reflecting the pain which the market is experiencing and the irony is that once again, markets were completely disconnected once with reality. This upward move in the price of the precious metal could certainly continue over the coming days, as traders will remain biased toward safe haven trade. The Fed will also be quite confused due to the lack of information on how the geopolitical world will shape itself after this incident and whether or not this matter will prevent them from pulling the trigger on another rate hike.
If the Fed cannot increase the rate, it could result in the dollar’s recent rally losing steam and causing it to roll back down that mountain which it has been fighting to climb up over the past few quarters. It might be time to batten down the hatches as storm Trump hits the financial world. Stay safe out there!
If there is any one trend which has become acute, it is the one in which the polls have started to mislead the market. Going forward, we do not think anyone is going to believe them. There is absolutely no reality check and what makes it more insane is that the markets are making the same mistake over and over again. Markets were hoping for a Clinton victory, but clearly you can only live for so long in cloud cuckoo land.