One of the events of the year is, without a shadow of a doubt, the US elections in November, an event of great importance politics, but also geopolitics and finance given that Biden and Trump they have practically diametrically opposed approaches. To explain the possible scenariosi Andrew Lake, Head of Fixed Income at Mirabaud Asset Management.
Biden again?
“I expect one continuity in the policies of the Biden administration,” Lake emphasizes. Infrastructure should benefit chclearly of spending plans of the president in this sector, which will also affect related sectors such as construction, steel, etc. Infrastructure in the United States, such as highways, airports, and roads, needs improvement; the initiatives “Invest in America” and the “US CHIPS Act” they were designed to both stimulate domestic growth and bring some key manufacturing sectors back to the United States. This will benefit America's technology and semiconductor sectors. Clean energy and electric vehicles are also a focus of policy, so the US is likely to continue its focus on the environment, perhaps putting some pressure on the oil and gas industry
“Make America Great Again”
Trump “should focus on the issue “Make America Great Again” (MAGA), promoting domestic growth and reducing taxes, among other priorities. Real estate is likely to receive attention, given his involvement in this area, but he is unlikely to be able to maintain the low-tax policies of his previous term, given the precarious fiscal situation in the United States. He is less inclined to promote clean energy and electric vehicles; therefore, its impact would be different than that of a Biden presidency. One could expect a good performance from the defense sector and some domestic industries such as steel, as tariffs are likely to increase, an area already under scrutiny by Biden as well.”
The effects on inflation
It is possible – concludes the expert – “that a presidency Trump comport a greater risk of inflation, as he promised 10% tariffs on all imports, which could increase the costs of goods. However, this is not likely to immediately impact the Federal Reserve's decisions for 2024 or early 2025. By then, the Fed may have already begun an interest rate reduction cycle.”
