Those of us who bought into the idea of a tightly run US election watch, agog, as the stunning victory by the President-Elect unleashes the full 'gold rush' mania of those that pursue the Trump trade. Strangely, the idiom does not apply to the yellow stuff, Gold was a haven buy before the result, it now suffers under the roaring US Dollar.
Two of the many pivotal campaign pledges of the Republican camp that sent Donald Trump emphatically back to the White House were tax cuts, both individuals and corporate, and deregulations. As discussed below the promised lowering of taxes is likely to trigger inflationary pressure in the medium-term or at least will be a contributor but it appears that for now the planned decrease of corporate tax rates to 15% and lenient scrutiny of corporate America triggered a euphoric buying spree in US equities.
Such is the furore around the US election that what is normally a 'Tier 1' event, an FOMC rate decision, has all but been lost. Frankly, there were no great surprises as the FED kept in line with expectation to cut by 25-basis points, and with it an easy path of another such reduction in December being paved. Yet the intrigue comes from how the FED might view the new administration, because of possible deportations and tariffs which are inflation builders, and set out any adjustment to future policy.
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