Trump trade might reverse direction on further election uncertainties

The directional movements in the financial markets; strengthening of the dollar, selloffs in the bond market, and marching of US indices to record high, might come to an abrupt end and reverse course should there be further uncertainties surrounding the election. While the President-elect Donald Trump making decisions with regard to his upcoming cabinet, a group of activists led by Green party candidate Jill Stein is preparing to file a petition for a recount in key battleground states of Michigan, Pennsylvania, and Wisconsin.

According to the latest report, the activists have spoken with Clinton’s campaign manager John Podesta and urged him that Hillary Clinton joins this initiative. As of now, there are no certainties that Hillary might do so, but if she does it very much likely that the United States would plunge into civic chaos and the financial markets would face massive turmoil. Most of the Trumpflation trades would reverse course. In such a case a more than 15 percent drop in S&P would be achieved within days, whereas the dollar index could drop well below the 97 level. As the risk aversions would rise, major beneficiaries would be gold, the yen and the bonds.