The gang at Morning Joe has already elected Hellary Clinton president. The establishment might be right ... they usually are. But still the stock market has been in a swoon since Donald Trump's polling numbers have started rising. If he were to prevail on next Tuesday, it is likely there will be a continued sell-off as the nabobs at Goldman Sachs and others in the Wall Street canyon realize that their huge investments in Hellary Clinton have gone south ... see: CNBC Article. Of course, in time, investors would adjust to this new reality ... but it would take some time ... particularly since I expect that there would be some additional financial shocks ... for example, I would predict a half point increase in interest rates by the Fed in December as Janet Yellen tries to show Trump who is the real boss.
There also might be a few foolish big money investors who would pull the plug (Mark Cuban?) which would also roil the markets further, but by next Spring I expect that things would settle down as Trump and his financial advisers begin to remedy many of this country's structural problems. Of course the rest of the world would also likely be in a Brexit-like panic ... expecting Trump's opening negotiating positions on world trade and international relations to prevail. However, as these stances were softened, volatility might subside.
This exercise in parsing the consequences of a Trump victory is obviously premature, but world stock markets are usually quite predictive and, therefore need to be heeded. A Trump victory would entail swallowing a big dose of medicine ... but cures sometimes require such bitter potions.
2 comments:
If Trump wins there will be a huge selloff by offshore investors who universally view Trump as an unpredictable nutjob. You are grossly underestimating the damage that would ensue.
I think I understand this threat very well ... that was the whole point of this post. It is part of fixing things.
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