Donald Trump solidified his status as the dominant force Tuesday night in the Republican presidential primaries, but the growing possibility of a Trump presidency is reportedly terrifying investors on Wall Street.
Some investors have started to seek shelter and sell off positions due to the increasing likelihood Trump will secure the nomination and contend for the oval office in November. The New York real estate mogul’s unpredictable nature and tough talk on trade policy could add to volatility, reports Reuters.
“As the market rarely feasts on lack of predictability – Trump represents a nightmare for investors this year,” hedge fund manager Douglas Kass of Seabreeze Partners Management told Reuters, adding that Trump’s successful campaign has prompted him to short the U.S. stock market.
Driving the fear factor surrounding Trump is one word: uncertainty. This is in part due to a lack of specifics from the Trump campaign on how he would tackle the economy. Critical rhetoric on Wall Street, China and his recent call to boycott Apple for refusing to assist the government are just some of Trump’s actions causing anxiety among investors, reports Business Insider.
“The election this year is the height of uncertainty,” Phil Orlando, a senior portfolio manager at Federated Investors told Reuters. Orlando is reportedly reducing risk exposure in his portfolio due to political concerns, mainly Trump.
Trump’s potential economic agenda drew the ire of many economists in January, who lashed out over his calls for increased tariffs on China, which they worry will only end up hurting American consumers. His calls for mass deportation, if acted upon, could spark a recession according to certain critical economists, reports Politico.
“There is a good reason many people are upset and angry, because for many it’s been a very rough decade,” Mark Zandi, chief economist for Moody’s Analytics told Politico. “But if Trump’s policies were enacted it would be some form of disaster for the economy. If you force 11 million undocumented immigrants to leave in a year, you would be looking at a depression.”
Turmoil in the global economy this year has far more to due with historically cheap oil, weakness in European banks and instability in China than Donald Trump. When it comes to his economic agenda, Trump also has plenty of defenders. While warning that Trump’s position on tariffs could be irresponsible, Larry Kudlow, economist and former Reagan Administration official, said overall Trump’s plan would be hugely beneficial to the U.S. economy.
“I’ve spoken in defense of Donald’s tax policy and I will continue to defend it,” Kudlow said at a January event in New York. “The thing that’s so important in the tax policy is his corporate rate cut and easy repatriation of capital from abroad. These will add so much growth to the economy and the biggest beneficiaries will be middle income earners.”
A Trump campaign spokesmen responded to Reuters in an email, lambasting those on Wall Street who are against Trump. She noted many of those critical of Trump’s agenda are people who got the country into the financial mess of 2008.
“They have zero credibility,” Trump spokesman Hope Hicks told Reuters. “Mr. Trump will restore confidence to the global markets by ending runaway spending and borrowing, restoring trade balance and fairness, and bringing wealth to America’s middle class.”
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