(07 NOVEMBER 2018)DAILY MARKET BRIEF 1:Reaction to the US elections was limited but expected. The Shanghai Composite was

Reaction to the US elections was limited but expected. The Shanghai Composite was down 0.68%: Trump is free to continue his trade war. USD was lower, as combative US politics will head toward gridlock and disorder. Crude prices fell to USD 61.92 per barrel, down 4% in a week, despite expectations that sanctions on Iran will tighten. Trade-sensitive currencies had priced in the outcome, so were unchanged. We anticipate US stocks to rally on a smooth election and expectations that Trump’s expansionary policy will continue. No politician will stand in front of a tax cut. While the Federal Reserve Bank is still in a hiking cycle, the late-stage economic cycle will naturally decelerate the economy, despite Trump’s fiscal easing, suggesting that US yields are near a peak (10-year yields under 3.50%).

It’s a sad day for American liberals. President Trump’s strange behaviour and policy by the seat of his pants seem still to win support. Only with an unusually high voter turnout were Democrats able to gain the House, while Republicans strengthened their Senate majority. US cultural and political divisions have only deepened. A reactionary blue wave, expected to refute Trumps erratic leadership, failed to show up. Still, Democrats now have a check on Trump. We expect the House will try to impeach him.