Is Trump Winning A Surprise?

The mental fortitude along with foreign policy missteps of ex-President Joe Biden have often been called into question. Some key examples would be the failure to take a strong stance against Israel and Russia along with losing the competitive edge against the growing BRIC (Brazil, Russia, India and China). All these have led to the decline of US soft power and with it, deteriorating respect for her authority. As such, voters will be looking for a leader who can be authoritative and be taken more seriously. Trump definitely painted an authoritative image of himself following the failed assassination attempt and asking his supports to 'fight' with a clenched fist.

President Trump has repeated on different occasions that he will end the war between Ukraine and Russia. However, instead of helping President Zelensky fight against Russia (like his predecessor), Trump could very well pull support from Ukraine, allowing President Putin to keep the current territories that have been taken from Ukraine during the war. The withdrawal of support from Ukraine could also be due to the Trump-Ukraine scandal in 2020, where Trump tried to coerce Ukraine into investigating his political rival (both Joe Biden and his son). This ended with the call to impeach President Trump back then. No matter which side of this war an individual is on, it is clear that by stopping the war, no further lives will be lost and that is Trump's end goal as war fatigue sets in.

There's a saying that goes: "Even Donald Trump does not know what Donald Trump would do." At his core, President Trump is a businessman. He has years of experience when it comes to making business deals. And most of the time, he knows how to deal with his counterpart. Unlike his predecessor who seems to be giving scripted replies, akin to flying a flag, Trump has been known to pull back or even release the tension when needed to keep the deal alive and on the table. Most voters will appreciate that given the unpredictability of Donald Trump, leaders of foreign nations and political opponents will have to think twice when dealing with him. And by not letting them know his next moves, he gets to be the one that calls the bluff on most deals.

Scenario 1: When the US economy is strong and optimistic, investors will look to buy more US-denominated assets and that would drive up the demand for USD and in effect, the value of the US dollar.

Scenario 2: Alternatively, when the US economy is doing badly and there is a lot of fear in the markets, the reserve currency status of the US dollar will cause investors to buy up more of the USD causing the value of the dollar to appreciate.

In the short term, the market is a voting machine. In the long term, it is a weighing machine.