Our biggest concern would be if the winning candidate manages to get control of both houses. If that were to happen, then radical policy changes could be set in motion. The US political system is designed around a system of checks and balances, and that scenario, although we still believe it to be unlikely, could have a negative effect on global income stocks due to the increased uncertainty of policy direction.
Donald Trump has made it clear he would change things at the Fed, and thus uncertainty with regard to any new direction in Fed policy would certainly cause volatility and perhaps rising rates. However, the fundamentals will not have changed.
We remain late in this cycle and debt problems continue. Raising short term rates we believe would simply flatten the curve and thus (as before) suit our less economically sensitive companies.
Overall, we remain cautious due to the high debt and fragile growth environment. This was the primary reason why we reduced our holdings earlier in the year. The US election is just one more key risk among others, such as Brexit, geopolitical flashpoints and the Italian referendum which remain on our radar screen.
