US Election: Lots to see, nothing to do

Well. At least that’s over for another four years!

One unexpected bonus to the 2024 US Election is that we seem to have a clear outcome, quickly – one worry was that we might not have a verdict for days or weeks, like 2020 or 2000.

The American people have spoken. You might think that the answer they’ve given is controversial (although the other answer wasn’t exactly uncontroversial); but the results are the results.

Now look, Donald Trump was always going to claim victory before the final tally, but after winning Pennsylvania, Georgia and North Carolina, the weight of evidence is with him.

If we’ve learnt anything from 2016 it’s that the medium-term political direction is pointless to speculate about; President Trump’s first government wasn’t noted for the stability of its policy, its top team or its messaging. His victory speech reflected that. We saw lots of talk about a brighter, greater future, coupled with long rambles about the famous people involved with his campaign – podcaster Joe Rogan, golfer Bryson DeChambeau, and of course Elon Musk.

Implications

In the short term (overnight), markets are copying the playbook from 2016 – traders are buying US Dollars (pink), US Companies, both Large (Blue) and small (Orange). And in white, there’s Bitcoin – which wasn’t quite as prominent in 2016, but has now been embraced by the new President (sort of…).

Source: Bloomberg

The thing is we aren’t day-traders, looking to make a quick buck. These overnight moves could all change by the end of the day; and couldn’t have been reasonably predicted beforehand.

So we aren’t taking any drastic action in portfolios. We don’t think there’s any to take.

The world hasn’t fundamentally changed compared to yesterday, and when we manage portfolios, we look at long-term economic and market trends. They won’t change overnight.

There might well be changes in US growth, or debt, or trading relationships, or military involvement. Elon Musk might well be even more prominent in the future than we’d like him to be (for sanity’s sake).

But these things take time.

The global stocks, global bonds and global currencies that form the majority of portfolios are performing as we expect – diversifying each, smoothing returns for clients, which gives us time to properly think about the risks and opportunities which might be heading our way.