Let’s assume Trump wins or at least the market re-prices his chances of winning. What would a President Trump do and how would asset prices respond? It’s a question worth asking, but not an easy question to answer given that Trump describes himself as ‘totally flexible on very, very many issues’.
The eternal truth in financial crises is that debt is the heart of the problem. Without debt, there is no leverage and no forced selling. Warning lights are now flashing across emerging markets. Timing the next debt crisis is extraordinarily difficult, but we know where to look.