Donald Trump’s victory came as the first surprise for many around the world. The reaction in the markets was the second surprise. Investors got what they expected for a few hours overnight as the ballot results came in; stocks were crushed and metals spiked higher. By mid-morning on Wednesday, however, stocks were surging and metals rolled over.
Now, a few days post election, commentators and ‘experts’ have written stories to explain the action in markets. Some of these stories may even prove true. But at this early stage, investors should recognize that markets mostly reflect hopes, fears, and high frequency trading shenanigans. Reality tends to arrive later.
All eyes are focused on the first 100 days of the Trump administration. That would be a good period of time for investors to wait and re-evaluate which of the stories currently driving markets are fiction and which aren’t.
Dig a little bit and you will find reasons to question whether the theories being floated will ever be proven out. For starters, there is plenty of reason to doubt the current notion that we will see persistently higher interest rates.
Rates jumped higher following the election. The supposed rationale? Trump has spoken critically of the Fed’s low interest rate policy in recent weeks, and he is also advocating for a trillion-dollar federal infrastructure program.
This post was published at GoldSeek on 15 November 2016.
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