It will have escaped no one’s notice that Donald Trump will be the 47the president of the United States. On the other hand, the surprise came from the speed with which this victory took shape and by its scale. Indeed, the Republicans won not only the White House but also the Senate and (probably) the House of Representatives. The icing on the cake is that the GOP (Grand Old Party) wins the popular vote and even allows itself the luxury of making progress in almost all states, including Democratic strongholds.
The United States
Markets responded in mixed ways to this event, with expectations of the impacts of Trump’s program, if it is actually implemented, leading to very different consequences depending on the camp. In summary, MAGA (“Make America Grea Again) or” America First “should benefit, initially at least, American companies. This program includes tax cuts for businesses (from 21% to 15%), tariffs on imports of foreign goods (60% for Chinese products and up to 20% for those from Europe in particular) and deregulation. The Russell 2000 index bringing together small and medium-sized American companies jumped 8.57% over the week. Generally speaking, the »Trump Trades« have pushed American stock markets, the dollar and bond yields upwards.
L’Europe
On the other side of the Atlantic, if the capitals launched into a competition of congratulations with regard to the new president of the United States, the markets, for their part, looked gloomy. It must be said that the announcement of tariffs on the export of European goods to the United States comes at a time when the Old Continent is accumulating problems. Added to the gloominess of its economy and its prospects are those of Germany whose febrile ruling coalition ended up collapsing and the approach of complicated negotiations with an American administration in the years to come. That said, at this stage there is no guarantee that the announced prices will be applied.
On a geopolitical level, this election is probably not good news for the Ukrainians, even if Trump reportedly promised to defend their interests in the express resolution of the conflict, another electoral promise. In the Middle East (just as for Taiwan), this election will have the effect of increasing tensions.
The other event of the week, the Fed meeting, almost went unnoticed. It must be said that the decision of the American Federal Reserve to lower its key rates by 25 basis points to 4.50%-4.75% was widely expected. Jerome Powell had to work hard not to let the press conference become “politicized”, as the questions he had to answer were so linked to his future relationship with the next resident of the White House. According to him, economic activity as well as the fundamentals of inflation and the labor market are moving in the desired direction. As for the future and Trump’s potentially inflationary program, he simply recalled that “this is not the right time to strengthen forward-looking guidance.”
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