Buxton: Trump will win US election

Added 30th September 2016

Old Mutual Global Investors CEO Richard Buxton is predicting a Donald Trump victory, and a subsequent aggressive shift in global fiscal policy.

Buxton: Trump will win US election

Buxton believes the EU referendum protest vote, which shocked financial markets on 24 June and that he himself discounted, “will probably be echoed in the US presidential election.” And that means we will see a big push toward fiscal stimulus, he said.

Both Clinton and Trump have made infrastructure spending a central component of their economic proposals in their bids for the White House. While Clinton’s plan entails spending $275bn over a five-year period, Trump has said he would spend more than double that amount on the nation’s decaying infrastructure.  

The palpable disenfranchisement in the US, similarly evident in the UK and eurozone political narrative of the last year, is really about stagnant income and wage inequality, according to Buxton. Which is why he argues “it is now in politicians’ interest to generate wage inflation.”

“In the US, wages are already running at 3.6% per annum,” he said.

“Employment is still fairly low, although the labour force participation is still lower in the US than it is in the UK. If you start putting fiscal stimulus in the US on top of wages at 3.6%, you could very quickly get that picking up, but they would rather have inflation now than deflation. That all points to me to steeper yield curves."

And Buxton anticipates the UK government will also be more aggressive with its fiscal policy.

“The tectonic plates between monetary and fiscal policy are beginning to shift,” he said.

“Carney’s actions post-EU referendum have been completely counterproductive – he’s eroded bank profitability and helped undermine confidence in insurers’ ability to invest in assets that will match long-term liabilities. This is why I think looking three years out, you will see fiscal stimulus.”

Sponsors

Portfolio Adviser: Guide to Europe

Portfolio Adviser: Guide to Europe

After a politically turbulent time in 2016, Europe has been under scrutiny with several nations going to the polls.The question asked, would investors be right to...

Kames Income Hub

home_research_centre

Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

AXA Distribution Fund
AXA Distribution Fund

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

Profiles

Viewpoint

Investment Strategy

Feature

Tweets

Events

PA Income 2017
PA Income 2017

Tuesday 4 July
Radisson Blu Edwardian Bloomsbury Street Hotel 

PA Edinburgh 2017
PA Edinburgh 2017

Thursday 7 September
Balmoral Hotel

PA Alternatives 2017
PA Alternatives 2017

Tuesday 12 September
Radisson Blu Edwardian Bloomsbury Street Hotel

PA Dublin October 2017
PA Dublin October 2017

Tuesday 10 October
Westbury Hotel, Dublin

Sponsored Content

OTHER STORIES FROM LAST WORD...