CONSCIOUSLY LIBERAL | The End of Trumpflation?

On November 9, the day after the US Presidential Election, I wrote a blogpost regarding market responses to the surprising Trump victory. It was an extraordinary day for markets as portfolio managers, institutional investors, traders, etc. scrambled for dividend-yielding stocks after pulling out of safe-haven investments. That marked the first day of Trumpflation, which famously led the DOW (DIA) and S&P 500 (SPX) to a 109-day streak without a decline of at least 1%. Both indexes were able to continue their streak even after the Feds raised interest rates to 0.75–1.00%.

CONSCIOUSLY LIBERAL | Market Response to Trump Win


November 9, 2016

Markets were disturbed when it dawned on investors that Trump became the frontrunner for the presidency. The shuffling and rumble were the manifestation of adjustments in market expectation of a Clinton presidency. Paul Krugman, when apparently asked about the markets and its trouble at the time, glibly stated that the markets would be down forever because of the uncertainty and incompetence Trump represents and will reflect in his policies. Although the elections last night were disturbing, has the US market been fundamentally damaged? In the beginning, around 9-10 p.m. ET when Clinton was losing Michigan, Wisconsin, North Carolina and Florida, Trump became the favorite to win and uncertainty riveted the markets (the Mexican peso went down, safe-haven investments went up like gold and U.S. Treasury bonds, etc.).