By James Baxter-Derrington, The Telegraph, 22 July 2024:
Surviving an assassination attempt has likely propelled Donald Trump into a second term in the White House, but investors would be foolish to think any knowledge of his first term could prepare them for the next.
Experts predict that Mr Trump will likely become the second president to win non-consecutive terms. But both Mr Trump’s policies and the wider economic backdrop are starkly different from 2016.
Debt stands at $35 trillion (£27 trillion) and the US government is borrowing the equivalent of 6pc of GDP. Yet Mr Trump and the Republican party are making no reference to the fiscal deficit – a marked shift from his 2016 platform of capping and repaying what the country owes..
Add to this an ageing population, rising unemployment and high borrowing costs, and the US is set for discomfort. Jerome Powell, chairman of the Federal Reserve, put it simply: “The level of debt we have is completely sustainable but the path we are on is unsustainable.”
Mr Powell and Mr Trump are likely to find themselves at loggerheads, as tax cuts, tariffs and tight immigration control could force inflation upwards and keep interest rates high – plus the Republican Party is likely to challenge the central bank’s independence.
There is a sense of what Mr Trump may want to do but “the hardest thing is identifying concrete policies”, as James Carthew, head of investment company research at QuotedData, says..
For investors wanting to make a play against the Mr Trump/Mr Powell fallout, increased geopolitical tensions and general maverick volatility, Mr Carthew notes Pershing Square Holdings (1.61 OCF, 20.3pc discount).
The investment trust is headed by US hedge fund manager Bill Ackman, who endorsed the Republican candidate just hours after the assassination attempt.
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