Yesterday, as the USA elected a new President, the world elected the most unpredictable leader in recent history. The time for unknown unknowns started with the longest inauguration speech in decades. This was followed by hundreds of executive actions and orders bringing about major changes. This might have been one of the most productive Inauguration Days, but whether it was positive or negative would depend on your side of the issue.
Some particular theses will be critical from a global trade and financial market standpoint for years to come in this term. First is the focus on oil & gas, if the previous administration was for renewal and limiting non-renewable. This administration has made an opposite view for now. With higher production of oil and export of LNG along with refilling the reserves things wouldn’t be more clear to the stakeholders.
The next major focus was on trade, where no tariff actions were taken, but there has been an order issue to investigate all the relations. This might move towards a universal tariff mechanism in months to come. Meanwhile, the immediate focus is on Canada and Mexico, which might see a 25% tariff hike from February 1st. China and Europe have been given conditional statements, while BRICS statements confused many.
In addition to these focus on immigration, federal employees are recalled to the office and hiring freeze. This surely makes the level of preparation clear to relevant stakeholders. It will also keep governments and markets on their toes for a while before the actual implementation begins.
Thus, it will likely create more volatility in months to come as global growth slows and the risk of inflation comes back with rates getting stable for now.
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