The financial markets, like the rest of us, are trying to work out what a Trump presidency might actually mean. We all know what Trump promised, but what will he actually be able to achieve? Quite a lot, you might think, given the Republican control of the House and the Senate. But splits in the party were evident during the election campaign.
And then there are other factors. US presidents, and pretty much every other politician standing for election, don't let the facts get in the way of a good election promise. As Pat Rabbitte famously said, that is what politicians are "inclined to do" to get elected.
Then there are the familiar financial constraints. The public finances in the US are still suffering the after-effects of the economic crash. Trump’s programme is high on tax cuts and spending hikes and low on ways to pay for them. Forecasters believe this could send borrowing and the debt higher. This may also help to stay Congress’s hand as it starts to haggle with the new president.
This likely gap between rhetoric and reality led to financial markets, after an initial serious wobble, taking a reasonably relaxed immediate view of the election result. A number of analysts and commentators compared it to what happened after Brexit – with an initial big fall followed by some recovery – only happening in a more rapid timescale.
And there are similarities between the two events, both of which caught the markets unawares, and both of which will contribute to significant uncertainty for a prolonged period.
Long game
But it is surely dangerous to be too sanguine. More than four months on from the Brexit vote we are still only starting to come to terms with what it might mean, and there is a lot we still have no idea about.
Like Brexit, a new presidency is not something which is going to play out over a few news cycles or a few weeks of financial markets. This is a long game, with a president who has proposed huge changes in domestic and international economic policy.
Michael Noonan is right when he said yesterday that he has "spent all my life listening to US election campaigns where there was a commitment to reform corporate tax. I've yet to see tangible measures, and I was first elected to a local authority in 1974." Even further back, in the Kennedy era, such promises were on the table.It may all come to nought again.
But the politics of all this is different now. There is the possibility of political agreement on lowering the corporation tax rate significantly, not to give companies a better deal but to encourage them to invest and create more jobs in the US.
Likewise, Trump’s plan to levy a special 10 per cent rate on money which companies repatriate from cash piles overseas could be sold as a way to help pay for badly needed infrastructure investment.This would change the international corporate tax landscape, with implications for Ireland.
Meanwhile Trump has more latitude as president to move on the other controversial area – trade – where he has threatened tariffs and other measures to protect US manufacturers.
Given the political mood that has brought Trump to power, it would surely be a mistake to conclude that his presidency will not make some bold moves. As this plays out more market volatility surely lies ahead.
