“In this situation, investors do not make much money,” he clarified. “The ability to make the sorts of returns people have become used to in the last five years will be somewhat make believe.”
Still, Becket reckons there is still a one in three chance we could find ourselves in this predicament under Trump, if he proves incapable of boosting growth, corporate investment remains low and global trade continues to shrink.
From pariah to economic messiah?
The last possible pathway for the global economy is analogous to Dante’s “Paradiso” or paradise. Despite all the uncertainty that surrounds Trump and his incoming administration, in the short-term it does seem that he has acted as a kind of economic messiah, “bringing the global economy the sort of medicine it has been crying out for over the last five to six years,” Becket stated.
“Business confidence is up; consumer confidence is up; animal spirits are rising; equity markets are going through the roof; and the US has seen 4% wage growth. There is an argument to be made that Trump is bringing the sort of medicine through his tweets that people really want.”
However, it will take more than cheerful animal spirits to solve the major issues of the global economy, like the extraordinarily high amount of debt and the demographic issues in the Western world and China.
He continued: “We would suggest that the really big problems of the world would still remain in this scenario. And unless Trump embraces China, he will likely fail to deliver exactly what he wants to do. And unless we see global trade expand again for the first time in three years, it is difficult to imagine the global economy roaring away into paradise from today’s current levels of mediocre to trend growth.”
