Donald Trump won Tuesday’s election to be the 45th president of the United States, calling for Americans to “come together as one united people” in a speech in New York early Wednesday, while his Republican party retained control of both houses of Congress.
“We are going to rebuild our infrascture…and we will put millions of our people to work as we rebuild it,” Trump said Wednesday. “We have a great economic plan,” Trump said, pledging that as president he would “double our growth and have the strongest economy in the world.” He continued, saying “we will get along with all other nations willing to get along with us.” He also singled out for praise Sen. Jeff Sessions, R-Ala., who he said is “highly respected in Washington because he’s as smart as you get.”
Stock markets worldwide had reacted negatively to the election results, while U.S. stock and futures plunged. Once the U.S. markets opened for trading at 9:30 AM New York time, the volatility common after presidential elections was on display. The S&P 500 opened at 2125, then rose to 2145 just before 10:00, but by 11:00 it stood at 2142, up 2.4 points, or 0.11% from November 8′s close of 2139. The Dow Jones Industrials closed Tuesday at 18,332 but rose to 18,424 at the market open; as of 11:00 AM it was up 67 points, or 0.37%, to 18,400.
Following the election results the VIX volatility index futures rose, as did the price of gold, and the value of the Mexican peso plummeted. However, by 11:00 Wednesday morning the VIX had fallen 2.54 points, or 13.55%, to 16.20 from Tuesday’s close of 18.74, indicating less volatility ahead, though it, too, showed wide swings on Wednesday.
Japan’s Nikkei index was off 5.3% on Wednesday, Hong Kong’s Hang Seng was off 2.2%, Germany’s DAX was off 1.2% with four hours of trading left but the FTSE 100 was off only 0.5%, also with four hours of trading left in the day, representing a much more tepid decline than was the case when British voters opted to leave the European Union this summer in the Brexit election.
Gold was off 2.3% to $1,303 per ounce while the Mexican peso was off 8.5%; in what had been seen as a continuing harbinger of the election prospects, on Monday the largest U.S. listed Mexican ETF had attracted record inflows.
What accounted for the surprise results, since most polls showed Clinton would defeat Trump? A clue was provided by political analyst Greg Valliere last month. Speaking at the Schwab Impact conference, Valliere predicted a Clinton victory, but provided this caveat about pollsters famously getting election results wrong, including the Brexit vote earlier this year in the U.K. and other foreign and domestic elections. “If you hold a controversial point of view,” like Brexit or are, perhaps, a Trump supporter, you are less likely to tell a “complete stranger who calls you up at 8:00 at night and asks how you’ll vote” on such a sensitive subject if you share what you know are controversial political views.
In an interview last Friday at Commonwealth Financial Network’s national conference, CIO Brad McMillan positioned the presidential election as the “beginning of the show, not the end,” since the issues raised in the election stem from three major secular trends. The issues that have caused so much controversy in the 2016 campaign, and the splits seen in both major parties, he said, are symptomatic of “the 99%” being unhappy with their lot in life. While Trump’s utterances may be “outside” the policies expressed by both Democrats and Republicans over the past 50 years, they reflect strong feelings among the American public, so Trump is more of a “feature, not a bug.”