Markets got Trump 2.0 right. What now?

It is 77 days till the inauguration of the next US President, Donald Trump as the 47th President. The Republicans has flipped the US Senate majority in their control. The House results are not in fully, but the Republicans are leading for now.

The markets got the Trump Trade right. US Stocks rallied, US yields increased and bond prices fell, the US dollar rallied and Cryptocurrencies rallied in the last month preceding the November 5th US Elections. 

What Now? Or, Now What? for the purists.

1. Trump has proved pollsters and most of the partisan/biased mainstream US media wrong and pulled off an incredible win.
2. The key policy planks that investors, global politicians and policymakers will be looking at will be: 
   1. Tariffs on all imports into the US, especially big tariffs on China 
   2. Deregulation, benefitting banks, oil and gas industry, energy producers and US manufacturing 
   3. De-immigration (inventing a word here), deportation of illegal immigrants and higher entry barriers for immigration
   4. A boost to China+1 
   5. Resolution of simmering geopolitical hotspots in Ukraine and the Middle East
   6. Continuation of Trump 1.0 2017-2025 favourable tax rates 
   7. Tax cuts on some segments of earnings, including tips for hospitality workers and over time earnings for workers et al.
   8. Higher fiscal spending, higher debt levels and concomitantly higher inflation.
3. Implications for the Global economy and the US economy are huge.
4. De-globalisation continues with tariff barriers being raised further
5. A US-China destructive trade war looms
6. China will take pre-emptive measures, from an expected stimulus announcement on Friday at the conclusion of the NPC 
7. China will also lead exporting country currencies into a series of “competitive currency devaluation” cycle. 
8. Expect currencies from the Renminbi to the Rupiah to the Won to the Rupee heading lower with respect to the US Dollar .
9. Emerging Market flows will slow down, as a strong US Dollar and high US Treasury yields keep US money market funds attractive for global capital
10. The US Federal Reserve will cut rates today, Thursday, November 7th, and will probably do another cut at its December 18th meeting. However, we could see a wait and watch policy outcome early next year.
11. Renewable energy sectors will face uncertainty and a lack of policy priority.
12. European allies will have to spend more of their GDP on their own defence and will watch the Ukraine Russia end game with concern.
13. Israel will be brought to the negotiating table with favourable terms and unstinted US support backing it 
14. The entry of energetic, successful hedge fund managers and entrepreneurs into the Trump 2.0 administration will unleash a lot of hope for pragmatic economic policies.

We will have more clarity over the next few weeks and markets will move in advance, in anticipation and as always, be proved ultimately correct. US exceptionalism is here to stay. China faces a Japan of the 1980s kind of challenge to its rising economic clout. That will be the defining conflict of this Presidency.