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Investors Predict No Let Up in Market Bloodbath if Republican Candidate Donald Trump Wins

Markets fear a Trump victory could trigger global economic and political mayhem, creating massive uncertainty for investors who had been counting on a win by Democrat Hillary Clinton, whose policies were seen as more staid but predictable

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An employee of a foreign exchange trading company works in front of a monitor displaying a graph of the Japanese yen's exchange rate against the U.S. dollar in Tokyo, Japan, Nov. 9, 2016. VOA

Investors should brace for a further slump in global stock markets, the U.S. dollar and most commodities if Republican candidate Donald Trump becomes the next U.S. president, as appeared increasingly likely Wednesday. Markets fear a Trump victory could trigger global economic and political mayhem, creating massive uncertainty for investors who had been counting on a win by Democrat Hillary Clinton, whose policies were seen as more staid but predictable.

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“If current market moves hold or go further, there is likely to be quite a bit of de-leveraging and forced selling tomorrow,” Mohamed El-Erian, chief economic adviser at Allianz, said as global markets skidded.

Trade could slump

Trump has threatened to rip up major trade agreements and impose barriers in the United States on imports from countries such as Mexico and China, which could reduce trade flows and harm sluggish global growth.

Jack Ablin, chief investment officer at BMO Private Bank in Chicago, forecast U.S. stocks could drop as much as 10 percent over the next 10 sessions if Trump is elected to the most powerful office in the world.

“Investors don’t know what he [Trump] is going to do; the policies he’s laid out have been vague and his demeanor is capricious,” Ablin said. “Foreign markets, particularly emerging markets, would take most of the brunt. These are markets that rely more on selling to us than us selling to them.”

Market turmoil could also prevent the U.S. Federal Reserve from raising interest rates as expected in December. As the chance of a Trump upset grew, global markets plunged, with some losses eclipsing the carnage seen after Britain’s shock vote to leave the European Union in late June.

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‘Horribly angry electorate’

“Whatever the outcome, this is a horribly angry electorate,” said Daniel Alpert, managing partner at Westwood Capital LLC in New York. “The markets will tank and then, those around Trump who have reasonable minds will script him with some pablum for the markets and calm them.

“But that is not the issue. The issue is that he cannot fulfill the goals of those who are in his crazy inner circle and, at the same time, truly address the interests of those who have risen up against the Washington consensus.”

The dollar, the Mexican peso and crude oil all plunged as Trump gained ground, with U.S. stock futures tumbling nearly 5 percent, likely wiping trillions of dollars of value off global financial markets, while traditional havens such as sovereign bonds, the Japanese yen and gold all rallied.

Emerging markets such as Mexico and companies related to them such as large U.S. stocks with global exposure are likely to bear the brunt of panic selling, investors forecast.

Mexico a bellwether

The MSCI Emerging Markets index plummeted 3.1 percent, its biggest one-day drop since the June 24 Brexit shock. The Mexican peso is seen as the bellwether for Trump’s chances of a victory as his policies are damaging to Mexico’s export-heavy economy. It plunged more than 13 percent to a record low as early projections put the maverick candidate with no political experience ahead.

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“We’d probably see a selloff in riskier assets, in particular emerging markets assets, particularly the Mexican peso,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C.

“We’re seeing that play out right now,” he said, “and I suspect if you see a Trump win we’d be seeing a continuation of something like that.” (VOA)

Next Story

Mueller Report Confirms Intelligence Findings About Russia’s Interference in 2016 U.S. Presidential Elections

"President Putin was extremely strong and powerful in his denial," Trump said at a joint news conference."President Putin says it's not Russia. I don't see any reason why it would be."

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U.S. President Donald Trump and Russia's President Vladimir Putin are seen during the G20 leaders summit in Buenos Aires, Argentina Nov. 30, 2018. VOA

Special Counsel Robert Mueller’s report on Russian interference is providing current and former U.S. intelligence officials with a sense of vindication, affirming many of the conclusions they drew following the 2016 election.

At the same time, however, some suggest the report released on Thursday by the Justice Department should serve as a warning that Moscow’s efforts to degrade and undermine American democracy, already extraordinarily successful, continue unabated.

Specifically, these former intelligence and national security officials warn the evidence in the special counsel report shows Russia was able to find and exploit U.S. citizens who were willing to go along with Moscow’s means, described as “sweeping and systematic,” to achieve their desired results.

“The investigation established that the Russian government perceived it would benefit from a Trump presidency and worked to secure that outcome,” the Mueller report said, adding that President Donald Trump’s campaign “expected it would benefit electorally from information stolen and released through Russian efforts.”

The January 2017 unclassified assessment by the Central Intelligence Agency, the Federal Bureau of Investigation, and the National Security Agency, issued in the aftermath of the presidential election, concluded Russia aimed to “undermine public faith in the U.S. democratic process.”

“We further assess Putin and the Russian government developed a clear preference for President-elect Trump,” the intelligence agencies wrote at the time, adding, “Putin and the Russian government aspired to help President-elect Trump’s election chances when possible.”

The assessment, though, has been attacked repeatedly by Trump.

FILE - In this May 8, 2017, file photo, former National Intelligence Director James Clapper testifies on Capitol Hill in Washington, before the Senate Judiciary subcommittee on Crime and Terrorism.
In this May 8, 2017, file photo, former National Intelligence Director James Clapper testifies on Capitol Hill in Washington, before the Senate Judiciary subcommittee on Crime and Terrorism. VOA

In November 2017, Trump slammed former Director of National Intelligence James Clapper and Former CIA Director John Brennan as “political hacks,” while deferring to Russian President Vladimir Putin.

“He said he didn’t meddle,” Trump told reporters following a conversation with Putin in Vietnam. “He said he didn’t meddle. I asked him again. You can only ask so many times.”

Trump again deferred to Putin following their July 2018 summit in Helsinki.

“President Putin was extremely strong and powerful in his denial,” Trump said at a joint news conference.”President Putin says it’s not Russia. I don’t see any reason why it would be.”

Already, the U.S. has taken action, indicting members of the Internet Research Agency, a Russian-based “troll farm” with ties to the Kremlin, as well as charges against 12 Russian military intelligence agents for hacking into Democratic Party computers.

Some former officials worry nonetheless that without a more forceful U.S. response, Russia or other adversaries will seek to get away with such behavior again.

“Those in America who cheered foreign intelligence attacks on our democratic processes, particularly for their own gain, should pay a price,” Larry Pfeiffer, a 32-year veteran of the U.S. intelligence community who served as chief of staff to former CIA Director Michael Hayden, told VOA.

But if they do, it will not be in a U.S. court of law. The Mueller report concluded despite numerous contacts between Russians and members of the Trump campaign, and evidence that campaign members “deleted relevant communications,” the evidence, “was not sufficient to charge that any member of the Trump Campaign conspired with representatives of the Russian government.”

As frustrating as that may be for some former officials, experts like Frederic Lemieux, a professor of applied intelligence at Georgetown University, warn it was to be expected.

“The report is a traditional criminal investigation,” Lemieux said. “We’re certainly not seeing the counterintelligence investigation.”

“I am mostly certain that there are several intercepts that exist that have been made on Russian targets and those Russian targets were talking about Trump and his associates,” he said. “You don’t see anything what they were reporting back to Russia when we know those individuals are important enough to be under surveillance 24-7.”

Hints of that type of information, which could reveal sources or methods, or harm ongoing intelligence operations, may be contained in parts of the report that have been redacted. But Lemieux said it is just as likely they were not included at all, as many counterintelligence investigations rarely produce the type of “damning evidence” needed for a criminal conviction.

“It’s probably there [in the counterintelligence investigation] that maybe not collusion but maybe a sense of being compromised might emerge,” he said.

Other factors, as well, have complicated U.S. efforts to hold individuals accountable for working with the Russians to interfere in the 2016 election. Among them, according to intelligence officials, has been the quality of the Kremlin’s spycraft, which left many Americans in the dark.

“Some IRA employees, posing as US persons and without revealing their Russian association, communicated electronically with individuals associated with the Trump Campaign and with other political activists to seek to coordinate political activities,” the Mueller report said. “The investigation did not identify evidence that any US persons knowingly or intentionally coordinated with the IRA’s interference operation.”

U.S. media outlets and numerous “high-profile” individuals were also taken in by the IRA.

t other times, Russia seemed to proactively play-off of the Trump campaign, such as in July 2017 when then-candidate Trump said he sarcastically challenged Russia to find tens of thousands of missing emails from Democratic candidate Hillary Clinton.

FILE - Democratic presidential candidate Hillary Clinton makes remarks at a Pennsylvania Democrats Pittsburgh Organizing Event at Heinz Field in Pittsburgh, Nov. 4, 2016.
Democratic presidential candidate Hillary Clinton makes remarks at a Pennsylvania Democrats Pittsburgh Organizing Event at Heinz Field in Pittsburgh, Nov. 4, 2016. VOA

“Within approximately five hours of Trump’s statement GRU officers targeted for the first time Clinton’s personal office,” the Mueller report said.

Despite such findings, some former officials say the Mueller report shows the U.S. intelligence community is not blameless.

“One of the lessons should be, we were pretty sloppy with our counterintelligence and our ability to counter stuff that was going on over the internet,” said Steve Bucci, an assistant to former U.S. Defense Secretary Donald Rumsfeld and a visiting fellow at the Heritage Foundation, a conservative public policy research group in Washington.

“We need to be more sophisticated about that aspect of it, at least more cognizant of it, and at least gin up our counterintelligence efforts a little bit around people that are involved in campaigns to make sure they don’t get caught up in this sort of thing and, regardless of their intent, that they don’t get tricked into doing stuff that’s counter to the general interests of the United States of America as far as us having fair and free elections,” he said.

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That opportunity likely will be coming.

Intelligence and Homeland Security officials have warned that Russia tried to meddle again in the recent 2018 midterm elections, with at least one Russian national connected to the IRA charged as a result.

And some analysts suggest Moscow is saving its best and newest tricks for the next U.S. presidential election in 2020.

Large swaths of redacted information in the Mueller report’s accounts of Russia’s IRAand “Project Lakhta,” would seem to back that up. (VOA)