Politics and businessNow we have Donald Trump as President, the worlds of business and politics collide. It will be like what Italy went through with Berlusconi, except not as fun. I expect Trump will behave exactly the same as President as he did before as a businessman. There are plenty of $10 words out there for what he is, ie "populist" and "demagogue". What he really is can be described with nickel words from the schoolyard - "bully" and "liar". He represents the worst of US business tactics. Anyone who has followed the softwood lumber file from the beginning knows what to expect. I think if we keep in mind that he is going to try to bully Canada and China and Mexico, in trade and politics, then we might have the most success as investors. Already we have seen clean energy and TPP shot down. NAFTA is certainly next. The Ontario car industry is bound to be a target, as is softwood lumber. Cheap manufacturing anywhere overseas is in jeopardy. He is going to try to move all of these issues in favour of the US. He will not care about what it might mean for the countries involved.
He does not let mere facts stop him, nor tolerate people opposed to him. I think that if Yellen does even one more interest rate rise this year she will be replaced as soon as he can do it. Trump will want low rates so he can borrow cheaply. Companies will rush to set up manufacturing operations in the US if they ever had them there before, so they can avoid levies. The Mexicans will be told that all imports into the US will face higher duties until a wall is built, or the wall will be built by the US using the money from levies. I don't think Trump was joking about the wall. Canada will be told that NAFTA is dead unless we voluntarily impose export duties where the US wants them, or import duties will be applied - on anything.
Anyone living in the US can expect higher prices for just about everything, so inflation is on the way. Global dislike for Trump and his policies will lead to a lower US dollar, making inflation worse. Canada and Mexico may have a recession in a year or so, but since one is overdue anyway the Trump effect would be to make it deeper. The Canadian oil and gas industry is going to have a tough time, unless a way can be found to export much more to other countries (ie Europe and Asia).
I believe that all the uncertainty and chaos is going to be good for gold, and I like Yamana because it also has copper and does not have US operations. The Canadian dollar will go down for the next four years or so, possibly as low as 60 cents, until we get over the trade shocks - also good for Yamana. Canada will also forge stronger trade ties with other Asian countries. I don't think Trump understands that the world has moved on from the US-centric business model that country has enjoyed through the 20th century. Business is more and more global. I think the move to locate in China, Russia, Europe and other countries will accelerate. The ultimate efffect of his term is going to be a weaker US, financially and politically. Time will tell. I have been wrong before.