The Uncertainty Surrounding Trump’s Next Moves: A Look at Full Transparency

As South Africa appears to be stabilizing, global conditions are becoming increasingly unpredictable, notes Peter Kent, co-head of emerging market fixed income at Ninety One.

He was one of the portfolio managers from Ninety One who discussed the outlook for financial assets in the upcoming year during a webinar on Tuesday.

Read:
Trump tariffs pose inflation risk: Kganyago
Trump promises ‘common sense’ ideas in inaugural address

Kent asserts that 2024 is shaping up to be a favorable year for South African assets, with inflation now under control and interest rates decreasing. Additionally, the S&P rating agency has revised its outlook on South Africa from neutral to positive.

However, even as the South African situation improves with slow growth, global uncertainties are expected to create volatility in financial markets, he points out.

Trump’s tariffs and policies

Despite thorough analysis on the potential effects of Trump’s policies and tariffs, Kent emphasizes the need for “humility” in forecasting. “To be honest, it’s uncertain what actions he might take.”

On Monday, Donald Trump was inaugurated as president of the United States, marking a political return after being defeated by Democrat Joe Biden in 2020.

Read: Oil slips as Trump signals Canada tariffs, domestic energy push

During his campaign last year, Trump consistently threatened to impose tariffs on other nations to generate revenue and encourage U.S. companies to produce goods domestically.

According to Kent, Trump’s approach to tariffs serves both trade and national security interests.

Read/listen: Global markets brace for Trump’s policies: What it means for SA

“His discussions about tariffs on Mexico and Canada are not merely about trade disadvantages; they also reflect national security concerns related to immigration and drugs. He intends to leverage tariffs for both trade and security negotiations that benefit America.”

Read: Gold advances as Trump stands by plans for Mexico, Canada tariff

Trump reiterated on Monday following his inaugural address that he aims to impose tariffs of up to 25% on Mexico and Canada until they cease the influx of illegal drugs, like fentanyl, and undocumented immigrants into the U.S.

Trump and the dollar

Since Trump’s election, the dollar has been likened to a “wrecking ball,” raising concerns about its continued strength, Kent observes.

The newly inaugurated president has openly expressed his disapproval of a strong dollar, stating, “He desires to revitalize the Rust Belt and rectify trade deficits. A strong dollar is counterproductive to those goals.

“While he aims to avoid inflation, implementing tariffs on consumer goods will inevitably lead to price increases,” Kent adds.

Iain Cunningham, head of multi-asset growth at Ninety One, mentions that the Trump administration is likely to advocate for a weak dollar periodically while preserving the dollar’s status as a reserve currency.

“There are numerous strategies they can deploy to weaken the dollar. A multilateral currency intervention could be one option if the Trump administration intends to use tariffs as a means to achieve its objectives.”

Dominance and tech billionaires

Clyde Rossouw, portfolio manager and co-head of quality capability at Ninety One, points out that financial markets will not remain solely focused on the U.S. president in the coming year.

“What differentiates this time is Trump’s influence and his connection with key figures in the economic sector. Many tech CEOs are now actively seeking his favor.”

Read: Biden cites threat from ‘extreme wealth’ in farewell address

Several tech billionaires – including Elon Musk, founder of Tesla and owner of the social media platform X, Amazon’s Jeff Bezos, Meta’s Mark Zuckerberg, and Apple’s Tim Cook – were present at some of Trump’s inaugural events.

Many of these individuals had been outspoken critics of Trump during his first term.

“Don’t underestimate the extent of their collective strategy to ensure their economic interests are prioritized,” Rossouw warns.

He cautions that Trump’s statements should be taken seriously, though not literally.

“When Trump mentions something like ‘Maybe we’ll invade Greenland’, don’t interpret it literally, but rather in terms of his intention to enhance America’s global presence.”

In the days leading up to his inauguration, Trump made waves by suggesting that he would take over Greenland from Denmark, reclaim the Panama Canal, and annex Canada.

Read: Greenland eyes benefits in Trump’s proposed land grab

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