President-elect Donald Trump defeated Hillary Clinton in part by building a coalition of voters who had not supported Republican candidates as enthusiastically in the past.
Trump won huge numbers of votes in counties with low annual incomes – over 51% of the vote in those counties, surpassing Clinton by nine points. These votes were won by Barack Obama by one point previously. Although Clinton notched some good numbers in wealthier counties, there were just not enough votes in those counties to outdo Trumps strength among the less affluent voters.
Markets were in a panic late Tuesday evening until Trump gave a victory speech in which he said he would seek common ground and reject hostility, seeking to work with other nations and to bring the country together.
Not only was a Trump victory a huge surprise to many market participants, but also the way in which he delivered a calm, collected and gracious speech once he had reached the 270-electoral vote threshold. The way in which he conveyed gratitude, his visions for building a better America along with his openness to international trade relations, calmed the markets and was much more President like than we have seen over recent months.
The Dollar held strong against most major currencies yesterday, apart from the safe haven Japanese Yen. Although global markets were in free fall when a Trump victory was looking likely, yesterday ended up being much more serene than many had expected. The Dow Jones, after an initial drop, closed near an all-time high. However, uncertainty around Trumps’ future policies will drive markets until he takes office on January 20th.
‘’Trump managed to tap into the anger of a declining middle class that is sick and tired of establishment economics, establishment politics and establishment media. People are tired of working longer hours for lower wages, of seeing decent paying jobs go to China and other low-wage countries, of billionaires not paying any federal income taxes and of not being able to afford a college education for their kids – all while the rich become very much richer’’ said Bernie Sanders.
A December interest rate hike by the Federal Reserve was priced at close to 80% only a fortnight ago. Yesterday, the chances of that happening slipped below 50%. A Dollar sell off, which had been hoped for by many UK importers to enable Dollar buying at more attractive levels, has not ensued yet, but still has potential.
(Photo credit: www.bbc.co.uk)