This Week's Focus: And if Trump wins?

This Week's Focus: And if Trump wins?


The first televised debate between the two candidates to preside US after the November elections, it took place this week. Although most journalists think that Hillary Clinton was much more convincing than Donald J. Trump, the fact is that polls continue to show a strong difference between the options of both candidates.

Candidates will face two more times, the next day on October 9 and in the third presidential debate on Oct. 19. For now, the advantage is for the candidate of the Democratic Party, Hillary Clinton, whom media as the NY Times victory assign a probability of above 70%.

Beyond own anecdotes of election campaigns, such as building a wall on the border or aerate flirtations other times, investors are interested in knowing the effect that policies of one or another might imply for different types of assets .

The main axes of economic policies

For Democrats,

  • Tax cut for the middle class.
  • Increase tax rates on high incomes.
  • Reduce tax evasion via tax havens.
  • Public spending on infrastructure.
  • More social spending (Obamacare).
  • Greater financial sector regulation, energy and health.

For Republicans,

  • General tax cuts, including corporate taxes.
  • Reduction of public spending.
  • Low investment in infrastructure.
  • Rights reform public services (elimination of Obamacare).
  • Increase defense spending.
  • Protectionism by tariffs and trade agreements repudiation.

What deducts the market

In the most likely case you win Hillary Clinton, the impact on markets would surely be positive, given the reduction in uncertainty and continuity of the policies developed in the Obama administration.

This scenario, according to UBS, would be only slightly negative for the financial and energy sectors in equities, while for the other sectors and especially for bonds would be neutral or positive.

Trump, the black swan.

Similar to what happened with the British referendum on the Brexit mode, there is a not insignificant that Republicans rise up in victory, hand Donald J. Trump possibility.

In this case, since the program of Republicans and comfort of market surveys, the stage for the assets would be very different. In a globalized world, the possibility that the first economy in the world adopt a protectionist stance would generate more uncertainty, although perhaps in the very short term financial and energy deregulation could give a reading of more growth.

According to UBS, the equities in general would suffer valuation, in an environment of higher rates with high volumes of debt. Health sector and cars, would be worse off, as well as fixed income by rising interest rates. Instead, most business sectors would benefit, although equities the effect of higher rates would offset surely improved benefits.