The US mid-term elections delivered a strong swing towards the Democrats, who appear to have won control of both the House of Representatives and the Senate.
What does a more constrained final two years mean for President Trump, and for investors? Jupiter’s fund managers share their views.
Amadeo Alentorn, Lead Investment Manager, Systematic Equities
"A Democratic Congress will reduce the administration’s ability to pass legislation, with more policy likely to come through executive action and more congressional scrutiny of that action. Voters appear to have been concerned by the higher cost of living (annual CPI inflation rose to 3.7% in September) and the continuing war between the US and Iran.
While the mid-terms are significant, one could argue that the result represents just another drop in a sea of uncertainty. Indeed, our systematic indicators have shown that market uncertainty has remained elevated for some time, with concerns about valuations, market concentration, and the AI cycle causing investors persistent discomfort. Ultimately, we do not believe that the election is likely to materially deepen the already high levels of uncertainty. Instead, what is important for us is to be able to identify opportunities within this uncertain backdrop. We believe that following a disciplined and dynamic approach will be crucial in achieving this."
Ned Naylor-Leyland, Investment Manager, Gold & Silver
"US voters have expressed their unhappiness with the dollar’s loss of purchasing power. The administration has proven unable to get rising prices and the cost of living under control.
Investors in gold and silver are interested to know whether the mid-term results will affect wider fixed income and equity market pricing. Financial conditions feel tight. Any sense that asset prices might be hit could ease real rates and put a bid under US dollar-denominated gold and silver spot prices.
In my opinion, the longer-term macro case for monetary debasement remains in place. Debasement refers to the erosion of a currency’s purchasing power. Investors can hedge against it by moving capital out of fiat currencies such as the dollar and into uncorrelated assets such as monetary metals (gold and silver)."
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