Does the election of Donald Trump change the investing landscape? Some expect it to but we’d be very surprised if Trump’s eclectic mix of tariffs and tax cuts radically changes America’s course. The former is inflationary and risks tit for tat reprisals. The latter might work if federal debt wasn’t $36tn, rising at $3bn per day and costing $1tn (at the moment) in annual interest.
In the UK, inflation rose by 2.3% in the year to October, up from 1.7% in the year to September. We are not surprised, despite the expectations of many that interest rate reductions are a given. Perhaps of more concern is that the combined effects of recent hikes in minimum wage and employers’ National Insurance contributions are yet to bite. We stick with our prediction that the developed world is staring down the barrel of stagflation; a worst of all worlds where inflation bubbles away, economic growth is tepid and interest rates cannot meaningfully fall.
