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'We could all go bankrupt': eight leading investors on Trump

What next for the US?

Jim Rogers, co-founder of the Quantum Fund, speaking to Radio 4’s Today programme

I expected him to win and my view was if he wins, it is going to rattle people, scare people, because he talks about trade wars. What he does, if he does what he says, is going to be a disaster and we are all going to go bankrupt. Trade wars throughout history are serious problems.

The markets are all going to go down, including the dollar, I happen to be long the dollar, as I happened to think it would be good for the dollar. But people seem to be rushing to get out of the dollar. Gold has also got a situation with what is happening with the Indian government, which recalled rupees, and it caused the Indians to panic.

If you are in the wall business, things are going to be good for you. He says he is going to focus on infrastructure, I don’t know where he is going to get the money. But if you are in infrastructure you are going to benefit, his friends are going to benefit.

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Jim Rogers, co-founder of the Quantum Fund, speaking to Radio 4’s Today programme

I expected him to win and my view was if he wins, it is going to rattle people, scare people, because he talks about trade wars. What he does, if he does what he says, is going to be a disaster and we are all going to go bankrupt. Trade wars throughout history are serious problems.

The markets are all going to go down, including the dollar, I happen to be long the dollar, as I happened to think it would be good for the dollar. But people seem to be rushing to get out of the dollar. Gold has also got a situation with what is happening with the Indian government, which recalled rupees, and it caused the Indians to panic.

If you are in the wall business, things are going to be good for you. He says he is going to focus on infrastructure, I don’t know where he is going to get the money. But if you are in infrastructure you are going to benefit, his friends are going to benefit.

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Louis Gave, Gavekal Economics

Judging by Donald Trump’s likely win in the US presidential race, it would seem that the US for its part does not believe that political dynasties should be left to solve the country’s problems. Looking forward, the hope must be that the new president will rise to the huge challenges facing the US and the wider world with genuine solutions to real problems.

But I am doubtful, which is why we prefer countries and markets that have the advantage of small scale as entrenched interests tend to run less deep and finding common ground for the ‘shared journe’” is politically easier. It is also why we prefer overweighting countries with the Queen’s head on the bank note (and as a Frenchman, it really hurts to say this!).

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Nick Ford, manager of the Miton US Opportunities Fund

Any knee jerk sell-off as a result of Trump’s victory is likely to be fairly short-lived because the underlying fundamentals of the US economy appear to be improving.

We suspect there is a considerable amount of money on the side lines that will be looking to “buy the dip”. Sectors that should do well once the dust settles include financials and consumer cyclical stocks. Trump is known to have opposed further regulation of the banks which have recently had to curtail lending following more onerous capital requirements during president Obama’s tenure.

Any sense that capital ratio requirements might be relaxed could give the sector a shot in the arm. Trump’s plan to reform the tax code and aggressively cut both individual and corporation taxes should boost consumer spending and business investment assuming he can come up with a credible plan to finance his proposals.

This is a good backdrop for retailers and restaurants which would also escape Clinton’s plans to raise the minimum wage which is paid to many employees in the sector.

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Eric Lonergan, macro fund manager at M&G Investments

It's Brexit all over again.The immediate market reaction is predictable. Risk assets have fallen sharply, safe assets are rallying, and the dollar is falling. It's deja vu all over again. Like Brexit, will we see a reversal in asset prices in the next weeks or months?

He will be pushing on an open door repealing Obamacare and cutting taxes, which are arguably market-friendly, although both are likely harder in practice.

The critical unknown is whether a Trump presidency pursues his anti-trade, anti-China and anti-Mexico policies. Reason suggests that Congress and financial markets will regulate his ability to act. It is equally possible that these campaign rally cries are abandoned with the responsibility of power. But the real concern is that he will do what he says.

On domestic economic policy, the only policies where Trump is likely to secure Congressional support would be on tax-cutting and deregulation - which are likely capital-friendly. We might also witness pro-cyclical fiscal policy for the first time since Reagan, which would profoundly undermine bond markets. I would discount Trump's anti-Fed rhetoric. Ironically, looser fiscal policy suits the Fed, because they want to normalise interest rates. The greatest irony of this latest outpouring of populism may well be a set of policies which favour capital over labour, and look more Keynesian than neo-liberal.”

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Richard Dunbar, senior investment strategist, Aberdeen

Markets are buckling and will continue to. Most investors had calculated that Clinton would win, and markets are now recalibrating – along fairly predictable lines.

There's a natural flight to quality, with assets such the Japanese yen and gold climbing. Meanwhile those assets most associated with some of Trump's more anti-globalisation and protectionist policies are selling off, with the Mexican peso in the lead.

‘A lot of this selling will be irrational, though. Now is the time for cool heads. The US remains the country from which virtually all disruptive technology over the last 50 years has emerged; where the rule of law is sacrosanct; with relatively favourable demographics; and broad and deep pools of capital. None of these things have changed as a result of events overnight

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Erik Knutzen, chief multi asset investment officer, Neuberger Berman

Safe havens such as the Japanese yen and Swiss franc are likely to benefit during the immediate fallout – although the picture is much less clear for the US dollar and US Treasuries, of course. A concerted ‘sell-America’ trade is a distinct possibility.

A Trump administration is likely to be better for the traditional energy sector than a Clinton Presidency, and less damaging to the healthcare and financial sectors. United government may also remove the partisan obstacles to meaningful infrastructure spending and corporate tax reform, particularly the issue of profit repatriation – although it is useful to remember that Trump is far from popular among many traditional Republicans.

The biggest risk, of course, is Trump tries to turn some of the more populist rhetoric of his campaign into reality.

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Paul Ashworth, chief US economist, Capital Economics

With the Republicans holding the Senate and the House, there is now a greater chance that some, or all, of Trump's fiscal plan will be enacted. But the tax cuts, which are worth around $6 trillion over the next decade, would be mostly unfunded, particularly if Trump also boosted infrastructure and defence spending.

It is hard to believe that the Tea Party fiscal conservatives in Congress would be willing to blow out the budget deficit like that. It would put the Federal debt burden on course to exceed 100% of GDP within a few years.

On trade, we expect Trump to start by labelling China a currency manipulator and to bring a number of perceived disputes to the WTO. Tariffs are possible further down the line, but won't be the first option. He will also insist on renegotiating NAFTA, but it is hard to know what he hopes to achieve. His main criticism is that Mexico (and Canada for that matter) has a VAT, which he has characterised as a one-way de factor tariff. That is economic gobbledygook. TPP and TIPP are dead.

Given the adverse market reaction we have already seen, the Fed's planned December rate hike is now off the table.

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