What happens if Trump elected ?

[pixy242]

I believe in the long run, many factors affect the economy/markets than just who is President. However, Trump recently said this (source Washington Post May 6)

Presumptive Republican presidential nominee Donald Trump on Thursday said he might seek to pay back investors in U.S. government debt less than they were owed "if the economy crashed," raising doubts about whether Treasury bonds would be reliable in a future administration.

The comments were striking because, historically, U.S. government debt has been treated as sacrosanct, the safest investment in the world, and a pillar of global financial stability.

Speaking on CNBC, Trump said he embraces the idea of taking on debt, given that borrowers can try to tweak the terms later on. Indeed, as a businessman, Trump has used the bankruptcy laws on several occasions to reduce his companies' debts.

"I am the king of debt. I do love debt. I love debt. I love playing with it," Trump said.

"Do you believe that we, in terms of the United States, need to pay a hundred cents on the dollar, or do you think that there's actually ways that we can renegotiate that debt?" CNBC's Andrew Ross Sorkin asked him.

"Yeah, I think — look, I have borrowed, knowing that you can pay back with discounts. And I have done very well," Trump said. "I would borrow, knowing that if the economy crashed, you could make a deal, and if the economy was good, it was good, so, therefore, you can't lose."

How will he markets react to the possibility of President Trump ?

As he seems to be a loose cannon and the market hates uncertainty, can we expect volatility ahead of the elections or has the market factored this in already? Appreciate any opinions. tks.

[billyjoe]

Pixy, I think the world will turn on its axis as many flee to Canada.

------------billy

[pixy242]

Oooh, I am safe, as I am in Canada already My question was about the markets, not the globe though.

[Karel]

Isn’t this talk by Trump just hot air, as so much of what he says? The US debt seems to be quite manageable at the moment and presumably the coming years, so Trump can bluster safely in the knowledge that this kind of action won’t be required anytime soon. Lenders would realize the same thing, I suppose.

[Louetta]

It's debatable whether the US debt is manageable. Right now the Fed has a 4 trillion dollar balance sheet, so for every one per cent they earn on their holdings and pay into the treasury that reduces the yearly deficit by 40 billion dollars (1% of 4 trillion). That won't always be the case (or maybe it will). Also, if treasury rates do rise at some point, that will increase the debt because the treasury will have to pay out that money to whoever does hold the bonds (getting it back if that's the Fed). Right now with the Fed paying in all that money to the treasury and the treasury paying out at a very low rate, conditions are ideal.

[rdieder]

The better question would be which sector would do well under Trump's policies. I'd expect coal to comeback and other energy sector companies to do well.