“Political stock markets have short legs” – it is not known who said it, but this stock market adage could usually be relied upon.
However, in the current environment, responsible investors should not rely uncritically on this simple truth. In addition to disruptive technology, driven by artificial intelligence, a political trend towards nationalization is developing that is striving to reverse globalization in many ssectors.
Globalization has allowed economic output to grow for decades and prevented inflation by opening up new resources. For many people in the traditional economies, this has happened far too quickly, which is also reflected in the economic policy plans of the newly elected US government.
The worlds of politics and finance are gearing up for Donald Trump’s term in office in the US, which begins on January 20, 2025. While there is speculation in the geopolitical hotspots about possible negotiated solutions, the capital markets are beginning to assess the fiscal plans of the future US government. There is broad consensus that the tariff, tax and spending plans will drive up inflation again. The very positive assessment of the US central bank’s future interest rate policy at the beginning of this year appears to be reversing. Real interest rates, which had reached their highest level since 2007 due to falling inflation, are falling significantly. This could benefit companies in the coming months, provided the economy remains in growth mode.
We assume that positive company results will also be reported for the fourth quarter and that stock markets therefore still have potential. With the implementation of the announced trade policy in the USA, uncertainty will increase again and investment portfolios will need to be managed more actively.