Advisor Insight

Trump's presidency creates market volatility

Jim Pavia, Money Editor
Trump wins

Barry Glassman, founder and president of Glassman Wealth Services, weighed in and outlined what he sees ahead on the financial landscape now that Donald Trump has been elected president.

Global financial markets convulsed as Trump claimed victory in the race for the White House after a polarizing campaign that investors had largely bet against.

There was an initial surge of money into 10-year Treasuries as Trump's victory became clear around midnight Eastern time, as investors looked for a safe haven. That pushed down the yield on the bonds towards 1.7 percent. But that move swiftly reversed after Trump's victory speech, as the markets anticipated a jump in borrowing and higher inflation. Investors dumped Treasuries, pushing yields higher.

Donald Trump
Carlo Allegri | Reuters

Right now, there is a function of fear in the markets, industry observers explain. Of course, what bothers the markets and creates volatility are uncertainties about a new president, his issues of trade and the reaction throughout the world.

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Glassman wonders what sort of corporate guidance we will see from CEOs and business leaders. He predicts that, moving forward, this Trump presidency will force CEOs to begin hedging beats on their next corporate earnings call.

That means we will see more market volatility of stocks as those corporate leaders hedge their bets. Glassman said that financial advisors do not really know what is coming from a Trump presidency, so it's important to keep a close eye on each sector and look for the winners and losers in each. In fact, it could come down to tracking winners and losers, company by company, he explained.

— By Jim Pavia, Money Editor