Trump’s Impact On The Market May Be Both Short And Long Term

Elections can or cannot have profound impacts on markets. In Western democracies, they generally don't, because the differences in the positions of the candidates are more superficial than profound. In these more commonplace elections, one group of stocks or some select assets might benefit because the winning candidate has more favorable positions toward a certain industry, but the overall market is only minimally impacted or if the impact is bigger, it is very temporary. Occasionally, an election comes along where the potential changes of a new administration are macro in scope and the market can be affected for months or even years. In the short term, the biggest price changes occur if the market is surprised.

The 2016 U.S. presidential election is one that can have both short and long-term effects on the market. The contrast between Donald Trump and Hillary Clinton is stark. Clinton represents continuity and furtherance of trends toward free-trade, open immigration with multiculturalism, and environmentalism that have been widespread in the West for the last three to four decades. She has stated that her dream is a "Western hemispheric zone with open trade and open borders." Trump, on the other hand, represents the counter forces to these views. His election would represent a major policy shift and a different political future for the country.

This struggle is not unique to the United States, but is taking place in Europe as well. The free-trade EU and single-currency Eurozone is a quintessential example of an open borders policy. Nationalist movements that oppose these views have arisen in all EU countries, however. The ones that came in first or second in the most recent EU parliamentary elections include: the Front National in France, the Party of Freedom in the Netherlands, The People's Party in Denmark, SYRIZA in Greece, Sinn Fein in Ireland, the Five Star Movement in Italy, and UKIP in the UK. Some of these parties are on the Left and some are on the Right, so there is no clear liberal/conservative division when it comes to globalist or anti-globalist views. The political parties with anti-globalist views can be categorized as populist, nationalist and anti-establishment.

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