Aspen Institute Romania and Bucharest University of Economic Studies are organizing a specialist debate on the financial impact of the political volatility induced by the UK referendum and by the November elections in the United States. The debate will be held on November 22, at the Bucharest University of Economic Studies.
The change in leadership at the White House has a global reach, of particular interest being the statements regarding the US-Chinese relation (see Trump declaration on currency manipulation from Beijing), as well as the volatility induced by the potential of Brexit. Although there is no consistent evidence that the political party of the president-elect has any influence on the stock market, the presumed actions of the Trump cabinet on economics and finance (tax cuts, trade restrictions and fiscal spending on infrastructure) seem to rally the investors for a switch from bonds to equities. Moreover, the premises exist for short term gain. In lack of clear policies from the President-elect, the risk of long-term negative effects is evermore noticeable.
Did the markets foresee a Trump victory and thus, be safer from short-term volatility than in the case of Brexit? Is Dodd-Frank inadequate and therefore, in need of dismantling? Shall systemic risks be on the rise in this sequence of disruptive events? Will the US Bond market reach its Big Rotation (30 years-old rally in bonds)? What are the consequences for emerging markets and currency markets and how will Romania be affected, if any? Is there a real possibility of a stagnation (as suggested by Goldman specialists) or a long-term recession (as predicted by Krugman) and, if so, what measures may be enforced at national level to mitigate the effects? These are just some of the questions we would like to answer during the debate.