The outcome of last night’s US presidential election came as a surprise to many around the world. It seems there were a lot of closet Trump supporters given his strong win. The surprise results sparked a global market selloff last night to the point where US Dow Jones futures were down some 800 points. Clearly this was a knee jerk reaction and regardless of which side of the political pond investors swim in, they’ve had some time to digest the news and given Trump’s generally pro-business intentions, markets have done a 180 degree turn with North American indices experiencing a strong rally as I type this mid-trading day.
Having said this, it’s still too early to tell what impact a Trump presidency will have on the world economy. A plan to relax heavy regulatory policies for financial institutions and pharmaceutical companies could benefit such stocks, while US companies which sell and buy internationally could suffer due to higher costs and/or reduced earnings.
Trump’s goal to reduce taxes and increase infrastructure spending could have a positive impact on the US economy in the short-term, but it would increase the country’s debt and it’s too early to tell if his increased investment plans would offset the debt over time.
We mentioned a few weeks ago that we would not be making any major changes to our long-term portfolio regardless of the US electoral outcome. This morning in our Hudson model portfolio we took profits by selling our position in General Motors given the company’s Mexican manufacturing plants. We also took advantage of the 4% rally in pharmaceutical GlaxoSmithKline and sold the stock in order to build a small gold position to soften any short-term volatility.
Have a great long weekend!
Daniel Popescu CFP, CIM, FMA, FCSI
President & CEO
MNP Tower, 3100-1021 West Hastings St.
Vancouver, BC V6E 0C3
T: 604-558-6830/1(877) 588-6822
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