The consequences of Trump’s win

After the initial euphoria in corporate America comes the crash. Here’s why…

In futures trading, the initial reaction was for the S&P 500 to rise nearly 2% overnight. The dollar’s TWI soared 1.6% as well, while gold fell by 0.6%. These are reflex actions, which will be followed by more sober assessments of what a Trump administration means for America and the wider world.

Going on Trump’s economic and tax policies, he will need debt headroom to accommodate income and corporation tax cuts. This means the debt ceiling due to be reset on 3 January will need to be at least $40 trillion (currently nearly $36 trillion). Furthermore, his policy of increasing tariffs on foreign, particularly Chinese imports will increase the CPI, so we can forget currently discounted cuts in the Fed Funds rate.

Here are some of the knock-on consequences: