Izak and Hywel on the Immediate Future, Tian on China, and Jamie on Resilience

Izak and Hywel on the Immediate Future, Tian on China, and Jamie on Resilience

Last week, Donald Trump secured the presidency of the United States for a second time, marking a remarkable return to power after a tumultuous first term.

His victory over Vice President Kamala Harris has raised a few questions in investors' minds, prompting widespread discussion about the potential economic implications of his policies.

Johann Els, Group Chief Economist at Old Mutual, shared his perspectives on the possible economic outcomes of President Trump's return to office, emphasizing the situation's complexity and the numerous variables at play.

Johan notes, “My best-case scenario includes a soft landing in the US, further easing inflation, further rate cuts, and a weaker U.S. dollar".

Discussing the potential impact of Trump's proposed policies, Els notes: "His policies regarding trade tariffs would mean higher consumer goods prices.  His immigration policy would limit labour supply and thus higher wage and salary pressures in the U.S., leading to higher inflation. Tax cuts would mean a higher budget deficit and thus upward pressure on interest rates."

Els also addresses the potential effects on the US dollar and emerging markets: "These policies and higher rates in the U.S. will likely mean that the dollar will not weaken as much as I currently expect and might strengthen. The opposite side of that coin is that Trump wants a weaker dollar. So, there's lots of moving parts in this equation."

Els also considers the international ramifications, particularly concerning China: "Because tariffs will hurt the Chinese economy, the share of Chinese exports going to the US has declined from 19% in 2017 to around 15%. The Chinese economy has adjusted slightly; it's not the severe impact it would have had four or five years ago. The Chinese authorities will likely stimulate the economy significantly over the very short term, it could be within the next three to six months."

He highlights the global interplay of economic forces: "There will be some counteracting forces at play in trying to limit the impact of Trump's policies in the rest of the world."

I now share the further thoughts and commentary of our leading experts on how we see events unfolding.     

Video Recordings - Izak Odendaal & Jamie Riddle

Two weeks back, we recorded sessions with Izak and Jamie.

Economic Overview by Izak Odendaal:

Izak Odendaal is our chief investment strategist. He speaks economics from a local investor's point of view.

This was recorded just before the US election, where Izak gave his frank assessment and opinions freely. This includes discussing the local political environment, our GNU's progress, and how this fits into the global perspective.   

To view this recording, click on the link below;

 Jamie Riddle Interview:

Our general manager, Piet van Zyl, interviewed our SA Olympian triathlete, Jamie Riddle, in a lifestyle segment.    

Jamie does very well here; he speaks freely and shows his true essence, revealing his refreshing honesty and sharing his vulnerability and immense strengths that shine through and resonate with any audience.

To view this recording, click on the link below;                                                                       

 The Singularity - what is it and what would it mean?

On 1 November Hywel George, Director of Investments at the Old Mutual Investment Group (OMIG), shares a technological deep dive into “the Singularity”, when humans merge with machines. When will it happen, and what are the implications?

This webinar took place just before the election, and his views and assessment of understanding the polls possibly also explain the overall result more clearly.     

On the feature topic, technological advances are increasing in improvements. Hywel shares that this will potentially change our daily lives, including in the positive scope of our healthcare and how AI is now self-teaching itself algorithms and coding.

To view, simply click on this link;  

The Singularity - what is it and what would it mean? | Money Matters with Hywel George

The Money Show | Key insights on global market trends with Peter Brooke

7 November

Peter Brooke from the Old Mutual Investment Group on Radio 702’s The Money Show, shares valuable insights into the US election’s influence on markets, China’s economic actions, and how global events could impact South African investors. Listen now to gain perspectives on how these dynamics are shaping the investment landscape, by clicking on the link below; 

 Prescient China’s Tian Pan interview on Business Day TV (BDTV) 

China has stated that it hopes for a 'peaceful coexistence' with the US in the wake of the country's elections.

For a closer look at this from a Chinese view, Business Day TV spoke to Tian Pan, head of product at Prescient China, where he explained that Trump was the preferred winner by many Chinese, who viewed Trump as the more “transactional friendly” candidate.

This short 8-minute interview was taken just as the US election results showed Trump taking the election, and you can watch by clicking on this link;

Concluding Thoughts

From my side, we all remember Trump's tweets on Twitter, now X, when he first came in during his previous presidency. Most of us have forgotten that he did tone down quite a lot in the last year of his previous term. So, let’s hope this time around, that he will be more in line with how he ended the previous term.    

Going back to Johann Els, he recommends that investors remain steady; “stick to your investment plan. I still think that there will be a somewhat weaker US dollar over the next six months, the Rand will strengthen, not only because of a weaker dollar but also because of improved South African fundamentals, less SA-specific risk, political risk and less fiscal risk." 

Friday Food for Thought