New US Govt Will Likely Act More Slowly On Dismantling Trade Pacts, Says JP Morgan

From Massita Ahmad SINGAPORE, Nov 10 (Bernama) -- Both the new US president and Congress will likely act more slowly on dismantling, among others, trade agreements, until some better alternatives can be found, says JP Morgan Asset Management's Chief Global Strategist, Dr David Kelly. Republican Donald Trump beat Democrat Hillary Clinton in a close race early Wednesday to become the 45th US President. "While last night's (Tuesday night) results represented a Republican sweep, the actual policy change may be far less dramatic than was proposed by Trump during the campaign," said Dr Kelly in Market Bulletin titled "US elections: A populist victory". Some believed that Trump will carry out his electoral pledge to withdraw from the Trans-Pacific Partnership and renegotiate the North American Free Trade Agreement. "It should be noted that there is a wide gulf between Trump's agenda and that of many 'establishment' Republicans and the latter may well balk at unfunded tax cuts or spending increases," he said. Dr Kelly said Trump's populist messages of lower taxes, gun rights and a conservative religious agenda, allied with opposition to trade agreements and illegal immigration, were ultimately successful in knitting together a winning coalition. On US interest rate, Dr Kelly said, the uncertainty and volatility following the US election will, for now, reduce the probability of a Federal Reserve (Fed) rate increase in December. This is although the Fed will want to leave its options open until it can assess the market and economic fallout from the election result, he said. Dr Kelly noted that the US economy that Trump will inherit is in "pretty good shape." Real economic growth has picked up in recent months while the unemployment rate, at 4.9 per cent, is close to any economist's definition of full employment. Moreover, the global economy is also showing signs of life with the global manufacturing Purchasing Managers' Index (PMI) hitting a two-year high in October. The PMI is an indicator of the economic health of the manufacturing sector. All of these would be positive for stocks and negative for bonds, he said. -- BERNAMA