Welcome to our November Integra Bulletin!
We hope this bulletin will keep you up-to-date with topical financial matters that can directly affect you… and your money!
The Trump Victory
A moment which we never truly expected to arrive has done just that. Donald Trump's victory march into the White House itself won’t actually take place until the beginning of next year, but his preparations are enthusiastically underway following a barnstorming election.
In years to come it may be that historians and commentators will look back on 2016 as the year when the rise of anti-establishment politics truly began. Whether it be the UK vote for Brexit, or the election of Rodgrigo Duterte as President of the Philippines.
However, both these results were surely 'trumped' by the election of a billionaire reality television star into the highest political office on our planet. Furthermore, this pattern may not end soon, with elections due in major economies such as France and Germany... which are already exhibiting signs that anti-establishment parties are polling far higher than previously expected.
Politicians need to urgently recognise there must now be a viable and transparent change to many aspects of government, in order that extreme politics do not become the new norm.
US: Trump talks economics as markets hold firm
Despite doom and gloom predictions of a Brexit-like reaction surrounding a Trump win, US markets seem to be holding their nerve. This could be due to investors now believing that much of Trump's campaign was a 'sales pitch' and his policies surrounding tax cuts, less banking regulation and increased spending on infrastructure could actually stimulate growth.
Consequently, the Dow Jones Industrial Average hit a record high on Thursday, climbing to 18,769 and has since continued to strengthen, settling around 18,800.
Despite having an allocation to the US in most portfolios, we do not anticipate making any immediate changes on the basis of a Trump Victory. He will not ascend to the US Presidency until January and even then, change (such as he is able to enact) will surely be gradual.
What we are currently seeing in the markets is a reaction to the uncertainty, rather than a clear indication of what is to come. The US remains one of the most dynamic and important economies in the World and only in the most extreme version of a Trump Presidency, which sees him ripping up trade deals and defaulting on government debt, is that likely to change.
UK: May seeks future tradeTheresa May has been on a trade mission in preparation for our exit from the European Union. Although she cannot strike any new trade deals until the UK has actually left the EU, she recently visited India to meet counterpart Narendra Modi... thus laying foundations.
Immigration has become a key talking point as Modi is keen to introduce a more flexible visa system for Indian business people, students and tourists.
The weaker British pound has not yet contributed to the shrinking deficit. Traders have seen a jump in foreign demand for UK manufactured goods but the effect of this increase is yet to show up in our trade data.
The drop in sterling had a more immediate effect on imports and some of the decline in the deficit may be attributable to a reduction in the number of imports... as buyers tighten their purse strings in preparation for things to come!
2017 and beyondWe would like to reiterate the message we gave following the Brexit vote which is that, for the moment, we are happy with your portfolio positioning. Nothing that has occurred in the past two weeks changes that viewpoint.
Of course, this does not mean we will not continue to work hard to ensure that asset allocation remains appropriate and we will be paying particular attention to the effects of the election on long term prospects for the funds which we recommend.
In the meantime, given the remarkable events of 2016 as a whole, it has been a very satisfactory year in terms of investment performance... which will be evident from your Transact valuations.
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