Trump’s election to the presidency has clearly been a definite shock to many Canadians, but its ramifications are not clearly negative, according to PIMCO head of Canadian portfolio management Ed Devlin.
“A lot was said on the campaign trail; the market is now trying to discern what will become reality,” Devlin said in an interview with BNN. “That’s why you’re seeing a little bit of a bounce on the market.”
While investors speculate on which pronouncements will actually be acted upon, traders will be incorporating the uncertainty in pricing tradable assets. “We’re grappling with what exactly last night’s decision mean[s], so risk premiums will be going up” across asset classes, according to Devlin. He added that as members of the cabinet and main players in US policy formulation are uncovered, investors will become more certain of where to position their capital.
One area that’s got investors’ knees a little unsteady is trade, given Trump’s mainly protectionist stance during the campaign. “It doesn’t look like it’s good for us right now, mainly because of the uncertainty around trade,” said Devlin. “But it doesn’t necessarily mean the wheels have fallen off either. The US is Canada’s biggest customer and if NAFTA is left broadly in place, certain sectors of the US economy can grow because of domestic stimulus that’s being applied.”
“It could be okay for the Canadian economy,” he said. “There’s a lot more uncertainty than answers right now.”
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