by Stéphan Marion, National Bank
Summary
• The Republican Party is in a good position to advance its agenda after winning the White House, the Senate and the House of Representatives for the first time since 2005. A combination of tax cuts and spending increases should lift U.S. GDP growth.
• A larger budget deficit and potentially higher inflation pressures could not only move the U.S. yield curve up but steepen it.
• Given Trump’s campaign rhetoric against free trade, there are concerns about a ramp-up of protectionist measures. But considering the likely fallout, it’s unclear to what extent the Trump administration will move in that direction.
• Canada, like many exporting nations, stands to lose if trade barriers are erected. It could be challenging to find other takers for our exports. Policymakers will need to find ways to make Canada more competitive and ensure that we do not lose access to global markets.
• Risky assets have reacted positively to Episode 1 of the new Trump reality show. We like the fiscal stimulus story. But there are many more episodes to come, with plots that will surely keep investors on the edge of their seats. At this juncture, until we get to know the actors a little better, we prefer to keep our asset mix unchanged with an above-average weighting in cash.
Read/Download the complete report below:
The Trumpquake - Special Report 10nov2016 by dpbasic on Scribd
Copyright © National Bank
