The morning after election night, when it became clear that Donald Trump would become the next President of the United States, Paul Krugman predicted a global economic recession “with no end in sight.” Initially he seemed to be right when the stock futures market indicated a sharp decline prior to the start of the trading day on November 9th. But when the stock market opened, major U.S. stock market indices such as the Dow Jones Industrial Average and the S&P 500 didn’t fall off the cliff. On the contrary, U.S. stock markets rallied with impressive gains. What gives?
It was true that leading up to Election Day, both domestic and international investors showed that they preferred Hillary Clinton to be the next U.S. president because investors hate uncertainty. Despite all Hillary’s personal shortcomings and policy flaws, she represented a known quantity to investors. On the other hand, a Trump presidency definitely brings a greater deal of uncertainty, which will likely increase stock market volatility. But increasing market volatility doesn’t necessarily represent a recession. – READ MORE
