Cover of MoneyWeek magazine issue no 819, Friday 11 November 2016

What will Trump do now he’s got the job?

9 November 2016 / Issue 819

With Trump in, deflation and the bond bull market are on their way out – expect inflation and turbulence and position your portfolio accordingly, say John Stepek and Matthew Partridge. Read this week's cover story here.

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Merryn Somerset WebbEDITOR'S LETTER

Merryn Somerset Webb

Why would anyone choose Donald Trump over Hillary Clinton? I’ll tell you why. Because for a large part of America, Clinton represents everything that they think is wrong with modern capitalism. As every email revelation of the last few months has shown, she is part of the great round of crony capitalism – a key part of a world of elites cosying up together as they run commercial and central banks, big companies and even bigger governments.

Fairly or unfairly, you can connect her with all the things that the “elites” are under fire for. Think of the transfer of wealth that comes from low interest rates and quantitative easing; of the way in which the chief executives of big companies pay more attention to their own multi-million-dollar pay packets than to long-term shareholders, to growth and to sustainability; of low wages (note that in this week’s election several states voted to raise the minimum wage); of uncontrolled immigration; and of the kind of relentlessly open globalisation that appears to pay more attention to the needs of corporations than it does to their workers.

Trump might be a rich New Yorker – and one who doesn’t look particularly presidential – but he doesn’t stand for these things. As strategist Pippa Malmgren points out, people think he stands for a capitalism that is less skewed to the big and more to the small. We’ve been writing here for years about the way in which modern elites were likely to get their comeuppance. If they didn’t have a go at fixing some of the distortions seemingly baked into modern capitalism, we said, eventually the voters will elect someone they think can. Change or you will be changed. Our own Brexit vote was part of that. And so is America’s vote. Think of it as less a vote for a man you don’t approve of than a vote against a system you don’t approve of.

The question now is whether the change Trump brings will make things better or worse. The knee-jerk assumption of most of the British press is worse, much worse. But look at his actual policies and it is hard to see just what is so very scary. Trump’s fiscal policies are pretty pro-growth. He says he wants to cut corporate tax rates to 15%; to allow repatriation of corporate cash held overseas in a one-off amnesty; and to spend $1trn on improving America’s genuinely awful infrastructure.

On trade he veers towards protectionism – or rather away from complicated trade deals. That’s not necessarily a good thing – but it makes him no different to every other politician in the US (and to quite a lot in Europe) at the moment. And he wants less regulation all round, something that tends to be good for small companies. This might all end up being inflationary and it might mark the last gasp of the great bond bubble. But, as global stockmarkets have also noticed, it does not represent the end of the world. No hysteria required.