Terry McCrann on the US election: Market dive just as ridiculous as Brexit plunge

THE plunge in our share market was absolutely understandable and indeed rational but also completely stupid, writes Terry McCrann.

A Hillary Clinton supporter reacts to Wednesday’s election result. Picture AFP

THE plunge in our share market was absolutely understandable and indeed rational but also completely stupid.

It was rational, because we simply followed global markets and indeed most specifically election ground zero: Wall St.

The market in New York was of course closed but as soon as it became clear that Donald Trump was going to win, trading in futures went over a cliff and pointed to the actual market plunging more than 4 per cent when it reopened Wednesday morning New York time.

The same happened with futures trading for the London Stock Exchange, while the biggest market actually open — in Japan — plunged 5 per cent.

This was Brexit Mark II. The — very stupid — ‘clever’ people who run the big investment institutions drink the same Kool-Aid as all those ‘wise’ and ‘sophisticated’ political commentators.

They are all agreed that Trump was just dreadful and that a President Clinton would be — correction, would have been — ‘good for markets.’

And they are just as completely wrong about this as they were about Brexit.

First, as was the case in Britain, the world this morning will be exactly as it would have been if Clinton had won.

Just as with Brexit, the vote didn’t suddenly cause the global machine to grind to a halt.

Secondly, when we do actually get to a Trump presidency — more than two months away in January — the US and far less the world isn’t going to be totally
up-ended.

So far as we narrowly are concerned, what happens in China — both its politics and its economy — remains far more important to our future than the US.

With one critical exception: what happens to global share markets and what happens to global interest rates. For these, the US remains ground zero.

This goes to the third big point. It’s not the president that controls them but major central banks and in particular the Fed.

A Clinton win would almost certainly have seen US rates go up in December — absent of course, the usual qualification of ‘events’ and Fed head Janet Yellen’s spinelessness.

Right now I’d bet on Yellen’s spinelessness. That would have to be good for Wall St.

Just as Brexit provided a great buying opportunity in British shares, yesterday — and what might happen today — could do the same for all world markets.

It would mean we’d be headed for an even bigger bust manana.

But hey, enjoy the party while Yellen’s music is ramped up.

Originally published as Terry McCrann on the US election: Market dive just as ridiculous as Brexit plunge