Uncertainty around Trump - Nomura

Analysts at Nomura explained that the level of uncertainty surrounding policy, and hence the forecast, is nearly unprecedented and arises from not just the long list of policies that could be changed, but by how much they may be changed.

Key Quotes:

"For instance, when and how large will the tax cuts be, and what will happen to immigration? Will Donald Trump be as tough on trade as he appeared in his campaign, or was that just a negotiating tactic? What policies will be promoted first, and which will be dealt with later? When will we know what the policies will be and if they are having their desired effect? 

In summary, we doubt that much of the uncertainty will be resolved until well into next year. A substantial amount of uncertainty involves Congress. For example, the composition and exact details of the tax plan won’t be known for some time as the House will be pushing for substantial changes to individual and business taxes. How large will the tax cuts be, who will benefit the most, what sectors may be hurt are questions that probably won’t be answered until next summer. 

Further, as is always the case, it is hard to predict the effectiveness of the minority party, particularly in the Senate, in constraining the majority. Nonetheless, most of the uncertainty originates with the Trump Administration. Even once the new economics team is named over the next couple of weeks, tremendous uncertainty will still surround many of Mr Trump’s policy areas, such as how aggressively he’ll pursue trade issues and immigration, to name just two. Given the unconventional nature of Mr Trump, his campaign, and the entire election, we may be facing a very unconventional President as well."