The election of Donald J. Trump last November came as a surprise to many. As a candidate, he was unconventional to say the least, and his unfiltered style left many people unsure of how seriously they should take his myriad statements, proposals and tweets. Around the globe, people are cautiously eyeing the United States, looking for some indication of what's to come.

Since the election, markets have reacted positively, with the Dow Jones Industrial Average rising by 9% between November and January and hitting the 20,000 milestone in the week after the inauguration. Investors appear to be focused on aspects of President Trump's agenda that are most supportive of growth, such as tax cuts and infrastructure spending, and less concerned about his seemingly protectionist views on trade or his departure from traditional foreign policy stances.

However, not everyone is convinced that we fully understand what President Trump plans to do, what challenges he may encounter or how he'll handle them. In speaking with members of our International Wealth Management groups, including our Advisory Services group, we found that many of their clients are still trying to figure out what impact the new president and his agenda will have on the global economy.

Who Is Donald J. Trump?

In the aftermath of the election, many clients took a “wait and see" attitude toward President Trump, hoping that he would provide more detail about his intentions in the time leading up to his inauguration. That does not seem to have happened. “There's increased uncertainty and nervousness," according to Margaret Franklin, President of BNY Mellon Wealth Management's Advisory Services in Canada.

Charles Long, Head of Greater China for BNY Mellon Wealth Management, agrees. “I don't think our clients feel that they have a better idea of where the administration is headed."

The uncertainty is largely focused on the president himself: Is he a shrewd businessman and savvy negotiator that will bring needed reform to government? Or is he a reckless outsider who's now suddenly in way over his head? Opinions differ from region to region.

“There isn't a lot of optimism among my clients when it comes to President Trump," says Franklin. “They don't trust him, and feel that he won't be able to actually accomplish most of what he has set out to do. They expect that he will discover that things are far more complex than he realizes."

Franklin says that many of her Canadian clients were “appalled" by the tone and tenor of his campaign. In Europe however, Jeroen Kwist, Head of International Wealth Management, says clients were less surprised. “We've seen a lot more of this style of right-wing rhetoric and anti-establishment feeling over here — Brexit being the prime example." Still, European clients are wary. “They think he's unpredictable and uncontrollable."

Sentiment in Asia is more optimistic. “Our clients are aware of President Trump's reputation as a tough negotiator and actually admire him for it," says Long. “Their hope is that he's just playing 'The Art of the Deal' and will work toward equitable trade agreements that bring stability to the region."

During the campaign, Long was surprised to find that many he spoke to in Asia preferred Trump to Hillary Clinton, despite his tough talk on trade policy with China. “In this part of the world, it's not uncommon for a politician to make outrageous statements and then back off. They don't expect his policies to be as severe as the campaign rhetoric."

What Does The World Want to Know?

Investors around the world are hoping to soon find the answers to several important questions that will help guide their decision-making:

Can the President Deliver?

In every region, investors have high hopes for President Trump's pro-growth economic policies, believing that what's good for the U.S. economy is good for the global economy. However, they also fear that his polices on immigration and trade might undercut those gains.

“The biggest concern is: Can he keep the support in his own country?" says Kwist, “If he loses meaningful support in the U.S., he won't be able to implement his policies. Without that clarity, the belief is that markets will behave with less certainty."

Will He Overplay His Hand?

“It's hard to say right now whether his tough stance on trade is a negotiating tactic, or a true expression of his views," says Long. “But there is concern that he might push too hard against U.S. trading partners and that there could be global ramifications that will hurt the markets. I believe the harsh rhetoric is setting the stage for tough negotiations. But he's walking a fine line."

What Impact Will He Have on the World?

“My clients in Canada are very concerned about the negative impact the administration's policies may have on social and environmental progress," says Franklin. “There is a lot of fear about what the world will look like four years from now."

“There's definitely concern among Mexican clients that we've spoken to," says Douglas Schaenen, Managing Director for Latin America, the Middle East and Africa. “Not about the border wall, but rather about how the Trump administration's trade policies will affect the Mexican economy and the strength of the peso."

“It appears that President Trump is questioning the entire post-World War II international order and that every established U.S. foreign policy issue will be re-evaluated and possibly changed," says Schaenen. “That's something a lot of clients will be watching carefully."

The First 100 Days

In the U.S., the first 100 days of a presidency are considered critically important to determining the success or failure of a new administration. It's likely that they will also be the most tumultuous days of the administration, as the new president tests the limits of his office and works to form the legislative partnerships necessary to implement his agenda in the face of increasingly staunch opposition. At BNY Mellon Wealth Management, we encourage investors to not be distracted by short-term uncertainty and avoid making decisions based on the current news cycle. In his February investment update, Jeff Mortimer, our Director of Investment Strategy delves deeper into why we recommend a broadly diversified portfolio with allocation weights informed by market expectations and aligned with our clients long-term wealth goals, even in the face of short-term challenges such as the uncertainty of a new U.S. administration and its impact on the global economy.

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