What if recount go against Trump?

The Prince and the Pauper

There was plenty of noise over the weekend over whether Russia had any influence on the outcome of the presidential elections, Trump certainly Putin’s preferred victor.

The Wisconsin recount is ongoing and there are some Clinton strong holds dragging their feet. The CIA has certainly returned fire, following James Comey’s influence going into the election, the only question now being whether there is going to be another twist.

The number of Americans below the poverty line are certainly beyond those that the government would like to suggest and Trump has come out all guns blazing, looking to build America from within and bring life back into the nation, the lower income households certainly there to benefit.

What if?

Before the famous victory speech, which brought the markets back from despair, Clinton was the market’s choice, the FBI probes rocking both the Dollar and U.S equities, but since then the dynamics have changed and what would really happen if the Wisconsin vote went against Trump?

Friday’s Michigan Consumer Sentiment and Expectation figures were reflective of how a nation has received the president elect, so to have the rug pulled from under their feet could well be catastrophic, not just for the struggling, below the breadline American, but also the financial markets.

EUR/USD Chart
EUR/USD Chart

If we take a look at the EUR/USD alone, the Dollar has rallied 4.35% since the election and the Yen is another story altogether, the Trump victory finally giving Kuroda some peace of mind, the Yen having peaked at sub-¥100 levels earlier in the year.

U.S equity markets continue to break into unchartered territory, whispers of the Dow hitting 20,000 now seeming to be as almost a sure thing as a Clinton victory just over a month ago.

And then of course, there is the FED. As of this morning, the markets have paid little attention to the noise and rightly so, speculation doing its rounds over any real hard evidence that the result was tampered with, the president elect seemingly wearing his more statesmanlike hat on Sunday.

But, it remains a possibility, however farfetched, that the recount could go against Trump, to many considered the prince, particularly the markets who have bought into the rebuild America story upon which global markets have rallied over the last month, the risk on sentiment driving gold down a whopping 9.1%.

How would the markets react? It’s almost unfathomable to consider the possibility of Wisconsin going to the Democrats, with Pennsylvania in waiting. The market’s choice of yesterday will likely be considered the nemesis of today, any hope for the Democrats likely to hit the markets hard. The market reaction may even be a carbon copy of the market forecasts of a Trump victory back in November, the Yen rallying to the ¥90s, the EUR to $1.15s and the Dow now with a far greater fall than on Election Day.

The chance of such an outcome is slim, but it certainly remains and time is running out for the Democrats to write one last chapter in the 2016 Presidential Election.

While the markets will undoubtedly suffer, in the end it will be the low income households that will feel it the most.