Donald Trump sweeps to victory in a landmark US presidential election

Possibly the biggest upsets in recent US political history, Donald J. Trump overcame his seasoned Democratic opponent Hillary Clinton to seal his fate in becoming the 45th President of the United States of America. The property tycoon's critics stood perplexed as the results continued to pour in and the likelihood of a Trump presidency transitioned from impossible into a reality.

In a strong wielded message to the political establishment, Trump supporters have shaken the core of American politics by upending the promises made by those in office who fail to deliver and positioned themselves towards a grouping that resonates closely to their grievance in relations to the management of the economy.

BREAKING: DONALD TRUMP ELECTED PRESIDENT https://t.co/raG0r7TGId #ElectionNight pic.twitter.com/DNXw8JBLoL

— Bloomberg (@business) November 9, 2016

But what does Trump bring to the table?

The biggest issue is uncertainty in policy having endured through a number of blunders where his opinion has contradicted a previously stated view on the same topic. This type of political inexperience leads markets to believe his "bulldozing" approach to solving problems will likely be met with stiff resistance from both the Senate and House of Congress even though the Republican party has comfortably secured a major in both.

A political show down between the US president and opponents in his own party won't bode well for confidence and could hurt future prospects.

Trump did however express an intention to boost infrastructure spend in his acceptance speech, an issue that's been driven on debate by his own party over a number of years. A boost in this sector of the economy could translate into real job creation and an expansion in economic activity.

However Trump's lack of a foreign policy and threats to renegotiating or scrapping existing trade agreements with long term partners has driven fear that his policies could throw world trade into disarray. This type of reaction is to be expected considering the levels of globalisation reached through progressive policies aimed at integrating countries closer to each other.

Protection of US goods and services will be high on the agenda for Trump if he wants to re-establish the manufacturing muscle his nation once boasted that has subsequently been taken away by the likes of China and many other nations offering cheap labour.

Although the US can't offer cheap labour it can find efficiency which will allow it to compete against these alternative products and services imported from abroad on top of the benefit of providing employment to millions of US citizens seeking income.  

In concluding inasmuch as the height of fears have been raised I believe Trump is likely to have access to some of the brightest minds to help him implement his plans but we'll have to wait to see who he brings on board when he enters the White House on the 20th January 2017 to be able to make a full assessment of the situation.

In the News Today

US Elections set for a tight race with Clinton tipped the favourite

Hardly anyone can say that the run up to this year's US Presidential Election hasn't lived up to the lively expectations it promised when candidates from both the Democratic and Republican parties started their campaigns months ago in a race to the White House with the contest reaching it's conclusive end heading into election day tomorrow.

But away from the low blows and side swipes handed to one another, come Wednesday after the results have been announced a victory celebration will be short lived as the real work begins in earnest with the inheritance of the current Obama Administration's issues of difficulty handed over to the next in line.  

Be it as it may the priority of the economy needs to take centre stage as the steadiness of the global outlook looks ever more uncertain in an environment of low to no inflation and negative interest rates coupled with lacklustre growth. The key for either Clinton or Trump will be a revival of confidence in the direction of the world economy which is largely influenced by the policy's set in the US.

How markets will react to the U.S. elections https://t.co/uaBUuzlRKy via @BV pic.twitter.com/e4XAA7xLQe

— Bloomberg (@business) November 7, 2016

Rejection of Chinese Deals raises doubts

As questions begin to mount over the benefits of globalisation, stats showing the rejection of proposed acquisitions of foreign companies by Chinese firms is headed for it's highest level since 2009 helping critics of the system point out another flaw in its uses as an economic regime amongst nations.

The most scrutinising nations include the United States and Germany whose policymakers both handed heavy blows to the aspiration of Chinese investors by stopping big deals dead in their tracks which could imply restrictive access to investing or a protection of sovereignity.

This chart shows the value of rejected Chinese acquisitions overseas https://t.co/f5gwa7BPcz pic.twitter.com/1zUGuHZid4

— Bloomberg (@business) November 7, 2016

Potential stockpile disruption could see oil prices spike

 A 5.0 earthquake in the town of Cushing, Oklahoma has pushed worries over the disruptions of oil supplies in the US as authorities attempt to verify the extent of the damaged caused near one of the world's largest oil storage facilities that has the potential to shut off thousands of gallons of fuel reaching end users.

However fears might be short lived as OPEC continues to battle infighting amongst its members heading into the second and final bi-annual meeting of 2016 due to be held at the end of November in which speculators had hoped would yield a positive outcome for the decline of oil production.

UPDATE: Fears of damage in Oklahoma after earthquake hits near one of world's key oil hubs https://t.co/xtqJEyWmO1 pic.twitter.com/Z7qZWePN8Q

— Bloomberg (@business) November 7, 2016

US job numbers continue to grow as economy appears weaker

A closely watched gauge of economic performance often associated with the prospects of economic strength or weakness is the US non-farm payrolls that's captured much attention since overtaking a previous record set for the longest consecutive jobs gained in the labour force which last occurred in the late 1980's.

The current reading continues to surpass it's prior record by an ever increasing number of months as time passes leaving many analysts and commentators baffled at the sheer consistency of the measure over the past five years in contrast to the stagnancy of the United States economy.

One would've thought the paradoxical thought which refuses to acknowledge the direct relationship between employment growth translating into economic value might have raised the alarm bells for policymakers who continually believe the farcical numbers they broadcast.  

70...

As in 70 consecutive months of job growth, by far the longest streak in history. #payrolls pic.twitter.com/1aHcX5MCZS

— Charlie Bilello, CMT (@MktOutperform) August 5, 2016

You sense the irony in US indices breaking into higher territory off the back of this measure when the steadiness of trend in economic growth is hardly explicit.

The most probable cause for a spike in optimism relates to a lower than expected number US Federal Reserve officials would be satisfied with in its restless progression of rate hikes or even yet the possibility of rescinding it's barely formative strategy of normalisation under the pressure of following its peers in other developed economies of driving interest rates lower than zero.

Strange as it may sound, the Fed's doubt that 70 consecutive months of job gains isn't enough to be comfortable the economy is capable of handling another interest rate hike eludes to either a lack of confidence in the measure itself or quite simply using it as propaganda feed to abate the feeling of nervousness amongst the investment community. A frightening thought to ponder over considering it's stimulating nature of financial markets...

BREAKING: Nasdaq and S&P 500 close at record highs » https://t.co/TGMGUaWBm7 pic.twitter.com/n11XN0yRVd

— CNBC Now (@CNBCnow) August 5, 2016

Yellen's dovish comments spells over optimism to hike rates by Fed officials

You would think that the hype built around the anticipated interest rate hike the market had been expecting from the Federal Reserve in almost ten years that consequently caused the US Dollar to strengthen way beyond thought would've provided certainty to markets but instead has brought on more worry and concerned that's fuelled the flames of unpredictability.

This after Fed Chair Janet Yellen spoke at the Economic Club of New York yesterday during a speech striking a more dovish tone than most had expected.

The problematic situation the Fed finds itself in at present falls squarely on the fact that it had delayed the process of the inevitable interest rate hike and fallen into the trap of leaving it too late by implementing constrained policy in times of great distress throughout the world. Things become worse when you look over the oceans to neighbours Europe and Japan who both initiated negative interest rates due to unresponsive economic activity.

Divergence between policy direction amongst developed economies suggests a decoupling of a common agenda to drive world growth in harmonious tandem. The Fed has committed itself to the normalisation process whereas other central bankers have opted to continuing pushing the extremes of monetary policy stimulus. This effectively deems the Fed's current stance void of any chance at succeeding as alignment has become a frequent feature in deciphering the types of measures used to revive or pull brakes an economy.

Janet Yellen's comments that the Fed is looking to "gradually"lift rates to a reasonable pace are signs that the decisiveness that once stood firm at the central bank is beginning to shake with doubtfulness over whether the current view of tightening policy is the correct decision and perhaps an indication that the over optimistic nature of FOMC members may have created expectation that the US economy could fend off more than one interest rate hike.

However its a double edge sword because the more the Fed holds off on hiking rates the more concerned the market gets as the bleakness simply reaffirms the calamitous outlook many are believing to occur.

Yellen's super dovishness creates confusion https://t.co/EC855KAhaT pic.twitter.com/sehG11jN9V

— CNBC International (@CNBCi) March 30, 2016

In fairness to Miss Yellen, the normalisation process cannot be seen as an ordinary event that takes place during the normal course of economic activity. The situation the world's found itself in is not ordinary and the measures applied so far highlight the extent policymakers have gone too to prevent the worse financial devastation since the Great Depression.

My greatest fear at the moment is it may be too late in the game for radical policy shifts from world governments that have been called for from many corners of the economy and as a result of the inaction a new economic catastrophe may emerge. If this were to happen there would be considerable less room for governments to fix the problem and even less leverage from exhaustive monetary policies.

This allows for very little maneuvering space to be flexible and would force politicians to finally confront the structural issues their economies having been facing for a number of years that keep getting delayed due to unpopularity amongst ordinary citizens. The unfortunate truth is you cannot reap the benefits of the system for which you haven't laid an ounce of work towards and the reality is going to come down particularly hard on those who have found commonplace in these conditions.

Observing the rhetoric from key figure in the central bank world would suggest that the tone once used to bring excitement back into the mixed is starting to wear thin with critical examples of that coming from the ECB and BOJ. Added stimulus measures have yet to drive markets forward with the latest statement by Yellen being the bone of contention between those who believe monetary policy still has the ability to add kick to the economy and those who believe the clock is ticking towards the next economic implosion.

Whether the latter or the former proves true will form the importance of our assessment of markets over the next month with much attention needed to be pointed in the direction of riskier assets and their ability to produce returns they've failed to generate thus far this year.

Resurgence in commodities are only short term in nature

Colossal; the best way one would be able to describe the movements that's been witnessed in mining counters over the past year with the present bounce making no exceptions when pulling off hair raising moves that would frighten even the most experienced trader. The perception around this relief rally is that it was a response to a rather dramatic selldown and should only to temporary.

I found this chart tweeted by the World Economic Forum which shows the net exports/imports of various nations around the world in terms of commodities as a percentage of GDP. The resource abundant countries make up the usual supply force that determine the amount of quantities available to the market however the most interesting shades on the geographical chart are those that are resource dependent or otherwise the part of the market that stimulates demand for quantities.

The most distinctive areas that we are able to identify are countries such as the United States of America, Japan, Europe and China. I have mentioned these countries specifically for a reason because if we think about the economic commentary that's dominating the news flow currently we'd find that all these countries are suffering from economic inaptness.

Japan and Europe have both implemented negative interest rates that has the world flummoxed about whether these extents to monetary stimulus is either a hinderance or a necessity to the financial system. The inability to abate a deflationary price environment has meant that central bankers are pressured to pick up demand or face dealing with an inactive economy that refuses to budge.

China has gotten stuck in a transitory state between transferring between that of an industrial based economy to a consumer services oriented economy. Investors are hopeful that government may indicate that it intends on lending a helping hand to the economy that has stumbled along but the role of government is slowly diminishing as increasing debt piles continues to prevent them from executing radical infrastructure programs that would boost the economy.

The US looks like the only nations that has the capability to steer the world economy in the right direction however if we look at economic indicators being reported they would suggest less than needed activity showing that it may not be the saving grace the world's looking for.      

Could the commodity crisis be an opportunity for #Africa? https://t.co/68Fwchtviw #commodities pic.twitter.com/wtN0GRhlM2

— World Economic Forum (@wef) March 8, 2016

All these nations have pertinent issues that trouble their outlook but more so the fact that each one has been place in a trend of slowing economic activity at the same time makes for a bigger implication for the global outlook as a whole.

We've seen commodity stocks radically improving after last years onslaught brought on by supply glut fears however the rally that has evolved does not feel as if there is a steady trend of long term buyers entering the fray but rather that of a short squeeze. It would be dangerous to think that we've seen the end of a disastrous time for commodity stocks because there remains issues yet to be resolved.

Iron ore prices spiked 19% on Monday 7th March 2016 to record the largest one day jump ever but Australia's steel trade port was shut down due to a hurricane that halted operations together with a bolstering demand for steel following the end of holidays in China have all played a part in helping prop up prices in the short term however a supply glut looks likely to remain in place for the next 2-3 years if demand doesn't pick up significantly.

Oil remains a key component in deciphering any direction. With OPEC on its knees and shale gas producers drowning in debt, its quite evident we are far from the resolution required to allow prices to begin its ascent.

Then there's the big issue of debt that seems to be haunting many mining producers. Although fears may have faded for the time being, the increase in commodity prices we've seen so far this year isn't sufficient to generate cash flow to pay away these liabilities quickly enough to chase away credit ratings agencies from downgrading them further. While the market has become intoxicated with optimism they've forgotten these issues that haven't gone away.

Before we see a return of investors in the mining sector companies will need to show steady demand for its products and with supply gluts on the scale we've seen so far as well as the lack of response to stimulus measures from the four nations I mentioned above I don't envision seeing this happening anytime soon.