Key Focus: Did The “Trump Tantrum” Just Trigger The Next US Recession?

Jon Economy, Fiscal Policies, Health Care, Market Commentary, Socialism

TRUMP MAY HAVE “PRICKED” THE GLOBAL BOND BUBBLE
Trump called during the campaign for a $1 trillion infrastructure package, $5 trillion in tax cuts, increases in military spending and the repeal ObamaCare, which could cost more than $350 billion over 10 years. At the same time, the president-elect has promised ‘not to touch’ Social Security or make cuts to Medicare. The moment Trump was elected the markets immediately reacted to this potential massive fiscal injection. Bond values plummeted as yields spiked.
Over $1T in global leveraged capital evaporated almost instantaneously.
TRUMP’S THREAT OF PROTECTIONISM & POTENTIAL RETALIATORY TARIFFS
Less precise than the inflation expectations being “baked in”was the pricing in of a potentially slower global economy due to Trump’s threat to renegotiate existing US trade agreements. His campaign rhetoric signals the likelihood of protectionism, tariffs and trade wars. None of this is particularly encouraging for growth projections especially with already slowing global trade volumes and for further increasing protectionist measures on-top of those already implemented.

This post was published at GoldSeek on 22 November 2016.