Yael Geffen, Ceo of Lew Geffen Sotheby’s International Realty offers insights into the impact of November’s Trump re-election. Here’s her commentary:
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A man strides into the White House, marches to the Oval Office and says: “Do you want the good news or the bad news?”
That sounds like the opening to a bad joke, but as sure as the next sunrise, it’s exactly what the majority party in South Africa’s GNU have been asking all day after Donald Trump’s presidential victory in the United States.
The good news
Let’s start with the good news, which is that post-election jitters dying down will signal further stabilization of the US economy and provide impetus for the Federal Open Market Committee – America’s version of SA’s Monetary Policy Committee (MPC) – to tackle the eye-watering prime lending rate.
The MPC rarely deviates from the US Federal Reserve’s lead when it comes to rate movement. We followed the Fed in September with the first rate cut since the pandemic – although SA went 25 basis points to the US’s 50.
And the CME Group that offers the world’s widest range of global benchmark products across all major asset classes, puts the odds at 95% that this month will deliver another rate cut. Also feeling bullish about the year ahead is Goldman Sachs, which is forecasting six consecutive 25-point Fed rate cuts between now and June 2025. If the MPC follows, SA’s property market will revive in a way that we haven’t seen in a decade.
But this is where the other shoe drops.
On the downside
Trump is known for many things, but a forgiving nature is not one of them. He was very outspoken about going head-to-head with the SA government during his last term – specifically about “land and farm seizures, expropriation and the large-scale killing of SA farmers”.
Since then, South Africa has hauled Israel, one of America’s closest allies, before the war crimes tribunal in The Hague, and also been very scathing of US policy.
With the new US president blind to most shades of grey, if you’re not with him, you’re against him. and global analysts believe that will very quickly manifest in a dramatic departure from past policy.
The new plan is likely to see a redistribution of US federal resources around the world, with supporters of US global policy benefiting, and governments viewed as “hostile” suddenly facing a bare cupboard.
The returning incumbent has apparently also mooted policy changes specifically ending development assistance to poor countries, except where America might derive direct and fairly fast benefit from providing that funding.
So, the good news is the economy next year should be brighter. The bad news is the guy who arguably holds the most significant sway over global financial trends doesn’t like us, and will probably flex some muscle to show his displeasure.
Geffen concludes: How this will play out in the South African economy over the next four years remains to be seen, but it’s going to require every diplomatic playbook our GNU possesses to make sure our economic recovery remains on track.
