Richard Buxton, head of UK equities at Old Mutual Global Investors, has predicted Donald Trump’s revolution will be positive for the US – and global – economy.
The manager of Old Mutual’s £2.12bn UK Alpha fund has claimed Donald Trump’s shock victory in the US elections may turn out to be the start of a sea-change in global economic and monetary policy.
Far from signalling the end of the world, Mr Buxton said there may be many benefits for investors from the star of the US version of The Apprentice becoming the next president of the US.
Mr Buxton, who is currently holidaying on the West Coast of America, said the television coverage of Mr Trump’s triumph is dominated by “revulsion, incredulity and reaction”.
He said unlike many commentators for whom Mr Trump’s victory is being cast as a disaster, he disagreed that this would be the outcome of the real estate magnate taking charge of the US.
Mr Buxton said: “Yes, this is a sea-change. Yes, there are many uncertainties ahead. Yes, to a generation brought up on the beneficial impacts of increased globalisation of trade, the prospect of throwing that multi-year process into reverse is scary. But consider the following.
“This is the end to the Washington consensus, to the era of 'Davos Man', to the belief that an elite knows best how to manage the global economy.”
Mr Buxton said this is the high watermark of central bankers.
From here, Mr Buxton said they will gently decline from being financial gods – arguably more powerful even than elected politicians, markets trembling on their every word – to officials, public servants of the common good.
Mr Buxton said: “For those of us who believe that central bankers have led us up a blind alley, this can only be good news.
“Negative interest rates, negative bond yields, central bank purchases of corporate bonds at yields well below those of the same company's equity yield…this is Alice in Wonderland central banking.
“The trouble is that for those central bankers promoting such policies, there is no exit route. To abandon such untried and untested policies would be to lose face, and that is the ultimate 'no go' policy option for them.
“So, three cheers that sanity has prevailed in a democracy through the unlikely candidate of Donald Trump. Central banks, starting with the US Federal Reserve, will learn that they are not the ultimate source of power in government.”
A return to positive interest rates, to positive yields, to an incentive for savers to save and to creating a real cost of capital for entrepreneurs will all be hugely positive consequences of this electoral revolution, Mr Buxton said.
In terms of protectionism, Mr Buxton said he has found himself increasingly persuaded that the mantra of 'fair trade' not 'free trade' is right.