Trump Wins: Investors Should Now do This…

In today’s Money Morning…the mainstream underestimated Trump…two voices that called the US election well in advance…it’s not all doom and gloom…the sector that could benefit from Trump’s win…

So, did you see that coming?

Not many people did.

Jim Rickards was one person who believed the mainstream had underestimated Donald J Trump’s support.

But Jim wasn’t the only one. Your editor isn’t surprised Trump won. And neither was another of our radical colleagues.

Who is this radical fellow? We’ll reveal all below…

That person is Jason Stevenson. He helms our Resource Speculator service.

Jason has said for months that a Trump win was on the cards.

He even went so far as to say that he liked him. There’s a controversial view that will raise a few eyebrows.

In truth, it’s not hard to see why. Despite being a billionaire property mogul, Trump is an outsider.

He didn’t conform to the usual political games. Trump wasn’t afraid to ‘lift the lid’ on what really goes on…how politics, political influence, and special interest groups really work.

Of course, that was the campaign. Now the campaign is over. What happens next? Will Trump stay true to his word, or will he fall victim to the system he has railed against for the past year?

Trump: good for stocks?

It will be some time before we know the answer to that.

But what we do know is that the markets have already begun to cast an opinion on where things could be heading.

Yesterday, Asian markets collapsed as it became clear Trump was winning.

Japan’s Nikkei 225 index fell 5.36%. The Aussie market closed down 1.93%.

Gold soared, and oil collapsed.

Initially, the market had one view of a Trump presidency — it would be bad news.

That flowed into the European market open. The scene was set for a global stock market bloodbath. However, when US markets opened, investors clearly had had enough time to think it over.

By the close, the Dow Jones Industrial Average was up 1.4%. European stocks had rebounded into their close too. The Euro Stoxx 50 index ended the day up 1.09%.

And today, in early trading, the Aussie market has rebounded too. The S&P/ASX 200 is up 2.71%.

So, what’s the deal?

The deal is that, much to most analysts’ surprise, not only did Trump win the White House, but the Republicans also maintain control of the Senate and House of Representatives.

In short, if analysts thought Trump would win the presidency, but lose Congress to the Democrats, they were wrong.

The way the market views it, the Republicans and Trump now have carte blanche to do as they wish. No doubt that may scare some folks from a social policy perspective, but that’s not our beat.

Our beat is the financial and economic. And although it’s doubtful that we’ll agree with all or even many of the policies Trump and his Congressional partners will enact, there’s little doubt it means one thing: the US economy looks set to get another huge bout of stimulus.

That could happen in three ways. First, stimulus to US companies through tax breaks. Remember, Trump wants to encourage big US companies to repatriate overseas profits by offering them a major tax break.

Second, Trump has said he’ll put American businesses and interests first. That could include tariffs on imports, especially from Mexico.

Third, Trump is no fan of US Federal Reserve chairwoman, Janet Yellen. He can’t fire her, but her term of office ends in 2018. It’s doubtful she’ll remain. In her place, expect someone whom Trump will trust to follow his agenda — in a completely independent way of course!

The upshot? A Trump win could turn out to provide a huge boost in a number of markets. One of those will be US stocks, but another will be commodities, especially if the US government and private sector begin a whole new round of spending.

And if commodities do rise, that could spell good news for Australia’s beaten down resources sector. It’s a sector that our resources analyst, Jason Stevenson, knows about as well as anyone else in the Aussie market.

It’s a contrarian and unorthodox move. But a Trump win could be the best news the Aussie resources sector has had in years. For details of how to play it, go here.


Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Fat Tail Investment Research, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.

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