That was the message at a special FN breakfast briefing in the wake of Trump’s victory over Hillary Clinton in the battle for the Oval Office.
Trump struck a more gracious tone in a victory speech given on the morning of November 9. The real estate tycoon and reality television star pledged to be president for all Americans and thanked his defeated rival for her service to the country.
Referring to Trump’s time on reality TV show The Apprentice, Ken Volpert, head of investments, Europe and global head of fixed-income indexing at Vanguard, said it would be interesting to see whether Trump takes off his “You’re fired hat” in favour of a more “collaborative” approach.
“That initial start of the speech he gave this morning was hopeful,” Volpert said, noting that more evidence would be required to draw any firm conclusions.
The upbeat view found limited traction with the audience. One questioner with a North American accent was keen to point out he was Canadian.
Asked towards the end of the briefing whether it’s probable that a Trump presidency will by and large be pretty much more of the same, a show of hands showed there was little agreement with the notion. Much of the audience also expected to see “very dramatic change” in the direction of the US administration.
The panellists – moderated by FN columnist David Wighton – warned against using the mornings market selloff as a guide to the long-term implications of a Trump’s victory.
Michael Grady, senior economist at Aviva Investors, who had been up since 1am following the vote, noted that the S&P 500 index fell 5.27% the day after Barack Obama was elected in 2008, albeit in the midst of the financial crisis. That index is up around 150% since.
But with Trump’s promises to spend on infrastructure and cut spending, the US looks set for fiscal stimulus. That could lead to higher GDP growth than otherwise would be the case, said Volpert, who added that fiscal stimulus ultimately will force the US Federal Reserve to impose higher interest rates.
If Trump is able to stabilise markets over the next month or so the Fed could be able to increase interest rates in December, added Grady, who said the US economy is ready for another rate hike in terms of metrics across the labour market, inflation and growth.
Brian Davidson, economist at Fathom Consulting, said his base case is that Trump is more moderate than suggested by rhetoric on the campaign trail.
However, Davidson said a scenario in which Trump brands China a currency manipulator and slaps trade tariffs on the Asian giant was one example of how global trade could “spiral” into reverse.
“We think Trump is more likely to be practical. He is a businessman, he has a big ego so if he feels things are not working he is likely to change his track for something that will work,” Davidson added.
Given Trump’s support for Brexit earlier this year, the panelists said his victory has implications for the UK’s relationship with US amid Brexit and for the European Union.
Populist parties in Europe and around the world could benefit, said Davidson: “Maybe the bigger picture though is what a Trump victory means for the anti-establishment, anti-trade, anti-immigration movements.”