The US Presidential election on Tuesday is another reminder that we live in revolutionary times.
Donald Trump took on the entire US establishment - the Clinton political machine, the Democrats, the Republican party, Wall Street, Hollywood, Washington, the US media - and won! And I suspect that most people outside the US, save for Vladimir Putin, were also fiercely opposed to the conduct of his campaign and divisive politics.
He won because he understood that the world is in revolt against the establishment and by positioning himself as an anti-establishment figure. By contrast, his opponent epitomised the worst of the establishment.
The revolution we are witnessing was kick-started 20 years ago, with the rise of the information revolution turning the polarity of information (and power) upside down. Information now flows bottom up, not top down. The entire social and political establishment that made a living marketing information to the masses is now redundant and being rejected by society.
The political implications of the elections on Tuesday extend beyond the Presidency. Republican control of Congress, and a US Supreme Court which will become dominated by Republicans, will make President Trump one of the most powerful Presidents in US history.
With such power, his economic agenda is likely to be passed by Congress - and his proposals are radical: a cut in US corporation tax to 15%; a 10% tax amnesty for the trillions in US corporate cash balances held overseas; and a $1 trillion investment in sorely needed infrastructure spending.
This enormous fiscal boost will come at a time when the US economy is showing signs of increasing strength. The unemployment rate recently declined to 4.9% and inflation is rising towards the Federal Reserve's 2% target. It seems very likely that the Fed will resume rate hikes at its December meeting.
The most significant financial reaction to the election result has been in the bond markets. With the prospect of higher short term rates, higher borrowing by the US government and higher spending, US bonds declined more than at any point since 1991. This collapse in prices and increase in bond yield has spilled over into international bond markets. It is very possible that we have seen secular lows in bond yields.
The main beneficiary of higher interest rates and higher economic activity is the US dollar. After the initial sell-off in the dollar it quickly recovered and will ultimately resume its strong upward trend against most other currencies. I am expecting an initial period of consolidation, especially against the oversold British pound, but a higher dollar is ultimately inevitable.
A stronger dollar is usually correlated with lower commodity prices. After an initial surge to $1331 per ounce, Gold has collapsed. It looks likely to fall further.
In normal times, energy prices also correlate strongly with the US dollar. But these are not normal times - we expect to see a surge in renewable energy supply over the next five years which will exceed the entire output of the fracking industry. It seems probable, short-term weather effects aside, that energy prices will collapse, providing a further boost to the global economy.
In this environment, equity prices will surge. The initial ill-considered collapse in equity markets, which we expected to be reversed within days or weeks was actually reversed within minutes and hours. When financial markets are as wrong-footed as they were on Wednesday, the counter-reaction is often very strong.
In the long run, the prospect of higher global debt levels, a more imbalanced global economy led by the US and the potential for the inflation genie finally to be leaking out its bottle after eight years of unprecedented monetary stimulus is alarming. The coming bust will be the biggest in human history.
In the meantime, whatever my heart might be feeling about Trump and his politics, I will be investing with my brain and carry on holding dollars and equities.
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