Investment Update

So there we have it. The pollsters have been confounded again this year by the public voting for the underdog, this time for Donald Trump in the US presidential election. It makes no difference that Hillary Clinton actually polled more votes than her Republican Party opponent - perhaps in excess of 2 million (or 1.5% of the electorate) more according to some reports; the US electoral college system has given us Mr Trump as the President-elect of the most powerful country in the world for the next four years - and perhaps a further four after that.
 
Not everyone's cup of tea by any means and a holder of some quite extreme views, Trump's election has given us more uncertainty both politically and economically. How the Republicans in the Senate and House of Representatives will react once he is in the Oval Office will be interesting and may determine to what extent he can push through his more outlandish promises within the USA, but perhaps the greater concern is in relation to external matters, not least his well-documented desires to tear up trade agreements with those countries he feels are not 'playing the game' (especially China) and to build a wall between the USA and Mexico to prevent illegal immigration from that country.

The majority of foreign leaders were highly critical and somewhat dismissive of Trump pre-election and how they deal with this going forward may point to how the trading situation develops between the USA and the rest of the world.

Although the UK's largest trading partner at present is the EU bloc, our proposed withdrawal is likely to place a heavy strain on that particular relationship; the fact that Switzerland appears to have caved in to EU demands on immigration in order to retain access to the single market does not bode well for the UK negotiators once the Brexit button is pressed. Based on individual countries the USA is the UK's biggest export market and it would be highly detrimental to the UK economy if Trump's isolationist tendencies resulted in that market being closed off to UK exporters - in addition, potentially, to the EU.

That said, the USA will still have to trade - the UK is one of its largest export markets - and the UK is considered to be well-located geographically, acting as a link between America and Asia. There is also a long history of trade between the two countries and - possibly relevant - Trump has family and business in the UK. So at present we remain cautiously optimistic on future developments.

As far as the EU is concerned, there presently appears to be some disagreement within the Cabinet as to how to proceed with the pre-button pressing, ie what is the UK actually trying (realistically) to achieve by invoking Article 50 and leaving the EU. The arguments are, on the one hand, that the EU needs UK trade every bit as much as the other way around and will accept a reasonable compromise on free movement and, on the other, that the EU is prepared to stand firm and force a hard Brexit in order to declare its authority and discourage other potential leavers. One estimate is that sorting out a proposed way ahead will take at least 6 months - which would put back the PM's timetable.

Come what may, economic data for the UK is reasonably positive at present. As ever it is important to have a well-diversified investment portfolio in order to avoid the problems associated with having all one's eggs in a single basket, and, at WJM, we continue to have a positive outlook for the medium to long term. Should you have any queries on this, or anything to do with investments, please do not hesitate to contact WJM on 0141 248 3434.