Latest / The SME Stream / Stephanie Batchelor: Milford Asset Management analyst on Trump's impact on the markets one week on

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Stephanie Batchelor: Milford Asset Management analyst on Trump's impact on the markets one week on · The SME Stream

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  Speaker 1: Stephanie Bachelor, Milford Asset Management. Hey, Steph, Hi, heavy Steph.
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  Speaker 1: We've had about a week of trading now since Trump
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  Speaker 1: won the election. So what are you seeing a week
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  Speaker 1: on in terms of themes positive or negative? Now that
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  Speaker 1: the dusters may be settled a little bit.
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  Speaker 2: Yeah, So there's been a lot going on, but it's
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  Speaker 2: all really been a risk on attitude, driven by the
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  Speaker 2: fact that most of Trump's policies are very pro growth. So,
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  Speaker 2: for example, small and medium sized businesses, particularly in software,
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  Speaker 2: have done very well and they're expected to see a
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  Speaker 2: boost from his support of business policies, things like tax
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  Speaker 2: cuts and less regulation. Another sector benefiting from that deregulation
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  Speaker 2: theme is financials. They've done very well, also helped by
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  Speaker 2: tax cuts and more supportive conditions for mergers and acquisitions.
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  Speaker 2: Another one is consumer discretionary, so that's moved higher. It's
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  Speaker 2: a sector that tends to do well as growth picks up,
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  Speaker 2: and now that the overhang of the election has gone
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  Speaker 2: and we're heading into the holiday season, it's expected that
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  Speaker 2: consumers will start feeling good and spending again. But on
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  Speaker 2: the flips, and of course, the consumer companies that are
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  Speaker 2: exposed to tariffs, so for example, any companies that import
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  Speaker 2: goods from China, they've been seeing a bit of pressure.
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  Speaker 2: And another area that's seeing pressure is clean energy or renewables. So,
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  Speaker 2: as you know, Trump supports traditional oil and gas and
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  Speaker 2: so he's expected to enact supportive policy there while reversing
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  Speaker 2: some of the more green friendly policies.
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  Speaker 1: But how long is it going to take for him
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  Speaker 1: to implement some of these policies.
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  Speaker 2: Well, it's looking like it will be a red sweep,
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  Speaker 2: so Republicans in both the Senate and the House, so
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  Speaker 2: that will make it a lot easier for Trump to
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  Speaker 2: enact as policies, but he still will need to convince
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  Speaker 2: the more moderate members of his party and there are
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  Speaker 2: still some checks and balances in place. The makeup of
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  Speaker 2: his cabinet appointees will also be key, and he's going
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  Speaker 2: through that process right now. But in terms of timing,
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  Speaker 2: so it's thought that tax cuts might be the first
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  Speaker 2: cab off the rank. He's hoping to see those flow
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  Speaker 2: on growth impacts much more quickly than he did when
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  Speaker 2: he implemented tax cuts back in his first term. Whereas
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  Speaker 2: the more extreme policies, so the ones around tariffs and immigration,
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  Speaker 2: they'll probably take a little bit longer to implement, and
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  Speaker 2: he'll also want to be quite careful because those sorts
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  Speaker 2: of policies are more inflationary, and he's not going to
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  Speaker 2: want to derail his sort of overarching plan, which is
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  Speaker 2: to stimulate growth and boost US businesses.
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  Speaker 1: TESLA has appears to have been one of the big
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  Speaker 1: winners post election. I mean, their shares, we're up I
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  Speaker 1: think something like forty percent over four days. Why has
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  Speaker 1: it been so strong?
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  Speaker 2: Yes, So a large part of it is that Elon
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  Speaker 2: Musk has been one of Trump's most visible and outspoken supporters,
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  Speaker 2: and Trump seems to view him as a trusted voice.
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  Speaker 2: So he's apparently been spending a lot of time with
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  Speaker 2: Trump since the election, you know, even weighing in on
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  Speaker 2: staffing decisions for the next administration. And actually Trump has
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  Speaker 2: just confirmed that Musk, along with one other will lead
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  Speaker 2: a new Department of Government Efficiency, and so they'll be
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  Speaker 2: tasked with cutting bureaucracy, wasteful spending, removing excess regulations, and
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  Speaker 2: even restructuring federal agencies. So this is certainly going to
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  Speaker 2: give him a lot of power, and Musk has presumably
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  Speaker 2: also been hoping that Trump will make certain decisions that
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  Speaker 2: will help his various businesses that he has.
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  Speaker 1: Hence the rally in his stock price. All right, now,
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  Speaker 1: the FED it cut the rates by a quarter of
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  Speaker 1: a percent last week, which is pretty much expected. I
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  Speaker 1: think we've had quite a few conversations now on the
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  Speaker 1: show in the last few days where it's starting to
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  Speaker 1: look like Trump's victory actually means the interest rate cuts
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  Speaker 1: are not as strong as we would have thought. Would
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  Speaker 1: that be what you think?
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  Speaker 2: Yeah, that's fair. On the FED chair Jeroone Power was
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  Speaker 2: specifically asked at on the press conference and sort of saying,
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  Speaker 2: you know, can the election outcome impact the path for
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  Speaker 2: the future interest rate cuts? And his response was that
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  Speaker 2: for now, there's no immediate impact, given we don't know
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  Speaker 2: the timing or substance of any new policies. So he said,
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  Speaker 2: you know, we don't guess, we don't speculate, we don't assume.
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  Speaker 2: So for now they do remain on a rate cutting path.
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  Speaker 2: But obviously how Trump's policies end up impacting the economic
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  Speaker 2: data further down the track will have an effect. And
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  Speaker 2: so I mentioned a lot of these policies are inflationary,
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  Speaker 2: and so that would reduce the number of rate cuts
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  Speaker 2: that are fed implements, and actually the market is already
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  Speaker 2: starting to price that in. So it's pricing in that
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  Speaker 2: rate cuts will potentially stop much earlier and at a
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  Speaker 2: rate that's much higher versus what was expected you back
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  Speaker 2: in a few months ago.
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  Speaker 1: Yeah, Steph, thank you so much. Stefanie Bachelor, Milford Asset Management,