Much time and energy has been spent decrying Donald Trump for his insults, on social media and otherwise, which are aimed at Hillary Clinton and many, many others.
But what about if Trump actually wins, and implements the policies he's announced during his campaign?
Researchers Didier Borowski and Philippe Ithurbide at Amundi Research have analysed Trump's promises – and it doesn't look good for the US if he wins.
1. Denial: Consumer spending rises
Trump has promised a raft of tax cuts, so the short-term effect would be a 0.7 point rise in GDP as people and businesses start spending.
2. Pain: Recession
But it will be short-lived: inflationary pressures and increased money supply will cause an "abrupt rise in short- and long-term interest rates", which will push the economy into a recession.
"Moody’s estimates such a policy could raise 10 year interest rates by 200 basis point in the first year and 460 basis points in the second," say the researchers – although they also see that as unlikely.
3. Bargaining: Unconventional monetary policy follows
Any inflation will be short-lived if the economy is tipped into recession, the Fed will seek to re-establish unconventional monetary policy, either through a Twist or another round of quantitative easing.
"It is surprising to see Trump complain about the Fed (which has not, he says, raised key interest rates enough), even though only intervention by the central bank could guarantee “painless financing” of the measures he proposes," say the researchers. Touche.
4. Loneliness: Trade tightens
A sharp increase in customs duties on imports from China and Mexico (45 per cent and 35 per cent respectively) will increase prices on all imported merchandise by 15 per cent.
5. The upward turn? Savings rise
In the long term, income tax cuts could stimulate savings and investment – although the researchers say the advantages are "more than offest by deficits and debt resulting from long-term interest rates, which, even if their increase is partly checked by the central bank’s intervention, would probably be higher than in a “counterfactual” scenario".
In short – here's their summary
|What a Trump victory means for…|
|… the US dollar||The impact on the dollar would without doubt be positive in the short and medium term if fiscal expansion plans are not blocked and/or the repatriation of benefits takes off. Completion of the Keystone XL oil pipeline, blocked by Barack Obama, would likely drag down oil prices and push the dollar upward. Less of a positive impact in the long term, especially if the United States’ financial position worsens dramatically and the Fed returns to a QE policy. In the short term, positive for the USD against the Mexican peso and the Canadian dollar. Negative against the major currencies.|
|… corporate bonds||Negative reaction from the credit markets. Underperformance of highbeta segments. Attention needs to be paid to the US economy, which is highly sensitive to an increase in rates. Corporate indebtedness is nearing historic highs. Significant increase in default rates.|
|… US equities||
The financial markets will probably respond unfavourably, at least initially, given the greater uncertainty and risk aversion
Sectoral views: defence and infrastructure sectors would nonetheless be likely to benefit from the spending increase. The oversold Health sector could come out on top. Do not count on “international” strategies but instead on purely domestic US strategies
|… gold||Purchase. A safe haven in a period of economic, geopolitical, and financial stress|
|… Europe||Weakened by the increase in protectionist measures and by risk aversion. US long-term rates are bringing European long-term rates moderately upward.|
|… global trade||Expect strong trade friction between the relevant countries (US, China, and Mexico) and major damage to global trade. Pursuit of de-globalisation inevitable.|
|… inflation||Higher import prices given tariff measures, and impact on the overall price level|
|… monetary policy||No rise in fed funds in December. The Fed would interrupt its monetary tightening due to the negative impact on growth. A QE4 would no doubt be considered by the financial markets later.|
The good news is, the researchers reckon the chance of Trump not only winning, but being allowed to enact all his promises, is about one per cent.
The chance of Trump winning but being forced to change his plans is about 19 per cent – while the chance of Hillary Clinton being elected and the world continuing as normal is 80 per cent.