What does the Donald Trump win mean in the greater world economy?
First you had Iceland in 2008 telling the London banking system to go to hell, we are not crippling our nation to pay tribute to them with IceSave for rigged bets that City of London fostered upon the national bank of the tiny nation and backed all the savings accounts of depositors in a new bank.
Secondly, we had Brexit earlier this year. The British people voted to begin exiting the European Union.
These two nationalistic moves set the table for a Trump campaign. The campaign’s planks of secure borders, trade pacts and tariffs to bring jobs back to the country and immigration reforms all play into a move away from globalist’s agenda.
As an aside this huge nationalistic bent in the US can be witnessed by stories on the decline of the NFL ratings due to San Francisco 49er’s quarterback Colin Kaepernick’s taking a knee in protest during the National Anthem. Now whether that is the reason for diminished viewership is not the question, it was the sentiment expressed by people questioned in many stories, which shows the changing intent of the people.
Moving ahead, we may see more movements towards nationalism. A further break up of the EU could be on the table as southern tier countries and regions. Yes the PIGS could rise up, but there are regions in these countries such as Catalonia in Spain are already actively seeking succession after years of rhetoric and hand wringing over the idea.
So the markets are reacting to this move in the quickest way it can. Sovereign bond prices have crashed as the yields climbed to yearly highs. According to bond market stats, there was $1.2 trillion in price losses last week after the election. While most people look at stocks prices going up is good for the US, this bond rout will have far more lasting effect.
The strengthening dollar is also playing havoc on Asian markets. The strong dollar will allow the Fed to raise rates in December, which means we could see a repeat of last year where markets are buoyed by year-end window dressing by Wall Street and then cratering stocks come January.