10 Nov, 2016

  • Investors have decided that the Trump presidency will be good for US equities and bad for US government bonds. These trends support our view that bonds yields will keep rising as the developed world enters a reflationary phase.
  • We expect a flurry of activity in the first hundred days after Trump’s inauguration on 20 January, because Presidential powers can be used to limit immigration, raise tariffs, cancel environmental regulations, etc.
  • After that, the President will need to get the agreement of Congress to pass legislation on complex issues such as personal tax cuts, infrastructure spending, and higher budget deficits. Delays and disappointment will set in.
  • Australia is not particularly affected by Trump’s policies. A trade war between the US and China, for example, will not impact our exports of coal and iron ore, despite what alarmists and journalists will tell you.
  • The Arminius hedge fund does not make political bets, but our fundamentally based positions have performed well in November so far.

[see more]