Trump won, but several effects are still uncertain on Wall Street, Argentina and emerging markets

It can be said that in the American election, no one saw her either. It went from a technical tie, according to the polls, to a resounding Republican victory. They may argue that several factors explain the overwhelming result, such as the fact that there were about 10 million fewer Democratic voters compared to the previous election, while the Republicans remained the same, and even increased a little more, but it can also be summarized by paraphrasing former President Clinton, “it was (Biden’s) economy, stupid.”

And now?, everyone asks. For now, this is a person already known, he is no longer an intrepid outsider of the anti-political right, and as political scientist Rosendo Fraga often reminds us, The political leader can change his ideology but not his personality, So you will surely see the usual Trump, perhaps somewhat overloaded, depending on the circumstances and characters.

If he meets his campaign agenda, there are several things that the market and geopolitics discount, such as the resolution of war conflicts before he takes office in January 2025, urging Ukraine and Russia, especially kyiv, to negotiate the peace, and giving it a more time to Israel, but both have the “deadline” of January 20.

While at the economic level, a new tariff war anticipates a cycle of more protectionism, there will be more inflation, in addition the objective of a strong dollar that will conspire against the prices of raw materials, and interest rates will be higher as a consequence of the flushing to which it will subject the US public accounts. So, analysts are recalculating the probabilities of the next Fed rate cuts.

Donald Trump and the link with Argentina

As for Argentina, opinions and expectations are well divided. Abroad, there is more skepticism about the benefits of Trump’s victory for the president’s libertarian administration Javier Milei, especially in the negotiation with the International Monetary Fund (IMF).

This rift is based, on the one hand, on the fact that Trump is only interested in the US, and what is coming, the new version of “Make American Great Again” (MAGA), points to that, only the US will have priorityneither Europe, nor Asia, and even less Latin America. So the IMF, as an emblematic institution of the multilateralism that Trump denounces, should not be interested either.

This part of the library believes that Trump can help him with something, if Milei asks him, but they also remember that as he did with his friend Macri, in the end, ended up letting go of his hand in 2019so the libertarian leader could only aspire to be a reference of the anti-political right in the region. Which does not imply that some investments will not arrive, but not how they are needed for a path of sustained growth and development. It is a very opinionated topic.

The truth is that The ruling party is betting that Trump will help him with the Fundwho would have a political interest in sustaining libertarian success. Hence the positive reaction of the Argentine assets that bet on the official scenario.

Still, the consensus is that Trump It won’t be very good for the emerging ones, a club to which Argentina belongs. In the local market, they glimpse a increased pressure on weight, As for the rest of the emerging currencies, a horizon of higher interest rates and lower direct and indirect growth, via commercial partners.

All this framed under a scenario of higher inflation. In other words, nothing good for the emerging ones, which will be victims of the global trade war, particularly against China. Although Trump played his cards in the campaign, plus the ideas that represent him, the effects of the Republican victory are uncertain, apart from the general lines outlined by the consensus. However, at the local level The issue of “carry trade” was one of the protagonists and the thermal sensation is that there is, at least for a while longer, fabric to cut. Until when?, the million dollar question

What other preliminary readings of Trump’s victory were made in these hours?

• Trump’s victory will boost Wall Street’s strength (reflecting investors’ expectation of possible business-friendly policies such as tax cuts and less regulation) and to the dollarbut it will entail higher inflation rates and, consequently, a more restrictive monetary policy. Markets are not only positioning themselves for a comfortable Trump victory in the electoral college, but also for the prospect of a Republican-controlled Congress.

• The emerging market currency sell-offs reflect winners and losers as investors factor in rising U.S. tariffs, elevated geopolitical risks and greater global uncertainty under Trump.

• On a macroeconomic level, one can expect a more dynamic US economy, with growth above potential and inflation above the Fed’s target, so it is likely that the Interest rates are also above pre-election expectationswhile macroeconomic fundamentals continue to be a boost for investments.

• Global stocks, as well as US stocks, have the potential to rise in the next twelve months as income increases and margins remain high, with the financial, technology and defense sectors standing out in the case of Wall Street.

• The possible implementation of trade tariffs would have a even more severe impact on European stocks and chinese, while the cyclical sectors, such as industrials and quality mid-cap companies. It would also favor banks, oil and gas.

• The projected scenario, however, tends to generate some volatility and nervousness in the market, especially with such a large concentration of power. Some advise Don’t be distracted by fireworks after Trump’s victory and look at the medium term that discounted a soft landing.