After a sweeping Democrat win in the US midterms, the world is left wondering: what will become of the world’s most powerful man?
The US president is known as the leader of the free world. But in Donald Trump, this leader has proven to be a volatile presence.
There are signs that could change. He has sounded a conciliatory tone in defeat, suggesting he is willing to work with the Democrats. But if his six years as president (over two terms) have shown anything, he can change his mind quickly.
It appears there are three potential ways the president can use his final two years in the White House.
The lame duck
The first is the version of the president that is, if his track record is anything to go by, the least likely. With his wings clipped by the Republican party losing both the Senate and the House, Trump will have no choice but to sit idly by and allow the Democrats to effectively run the show.
It has been noted that he has the power to veto any proposals, which is why this is more of a pipe dream for Democrats. Still, there is a chance that the current version of the president – licking his wounds and seemingly aware of his own shortcomings – continues for the next two years.
We’ve already seen how markets would react: AI would come under pressure as Democrats are viewed as less tech friendly, which could cause serious issues for economic growth. Yesterday, the Philadelphia Semiconductor index dropped 12%.
Still, I wouldn’t bank on the president being a lame duck, and neither should investors. At least not without more evidence.
The circus lion
Once feared, Trump could now become a performer for the Republican party, jumping through the hoops they tell him to.
He will keep his roar when told, but his claws will be clipped – particularly when aimed at members of his own party, who will aim to put a leash on the head of the MAGA (Make America Great Again) movement.
There are again signs this is expected, with experts suggesting the president could be pressured to end the war in Iran to bring gas prices down – cited by many as the main reason for his historic election defeat.
The wasp at a picnic
After a record heatwave this summer, most people understand how annoying wasps are at a picnic. Think of the Democrats as the picnic planners. With control of the Senate and House, they should have the opportunity to govern the country. But Trump has ultimate veto, meaning he can turn things away at a whim.
This version of the president is something that investors are already anticipating – at least that’s my reading of markets. The initial reaction to the Democratic sweep was negative, as investors worried about how the party will govern. But markets quickly recovered under the assumption that little will actually get done without the president’s say so.
It certainly does not seem beyond the president to stand in the way of the Democrat’s actions for the sake of it – just like a wasp buzzing around food without wanting to eat it.
Trump could also act against the interests of the wider Republican party, choosing to hit out at those he holds responsible for his humiliating defeat. It won’t do anything but would cause the party numerous problems.
There will be times when the president resembles each of the above, and markets will react accordingly. But one thing seems certain, the Democrat victory has at least taken the sting out of the president.
Jonathan Jones is editor of Trustnet. The views expressed above should not be taken as investment advice.