November 8, 2016

Expect a Trump Win and Violent Market Repricing

Image result for donald trumpApart from the election, all other stars seem aligned for a rate hike. The IMF gave the Fed a green light in terms of emerging-market expectations. Persistently dovish voices such as Charles Evans of the Chicago Fed and Lael Brainard, a Fed governor, have either been supportive of a rate hike or have remained silent lately.

The only thing that could throw the Fed off this path would be if a 10% stock market correction from a Trump win turned into a 15% or 20% collapse with global contagion. However, I expect that once the 10% correction is over, investors will take a second look at Trump’s policies of low taxes, less regulation and big infrastructure spending and like what they see. This means stocks may stage a post-election rebound soon after any correction.

But for now, a December rate hike is in the cards and almost nothing can stop it.



  1. Sir, Trump/Hillary ,these are all gimmicks. They are simply looking a solid reason to correct mkt at least 10%.This is because the the rally from February 16 does not have any powerful reason to go up to @ 8979 in respect of micro aswellas macro factors.Let us not be impatient ,particularly ,investos,.Wise investors will wait atleast up to 8200.

    1. Option writers also do not expect 8200 to break. For next series, 8000 is a strong support.