The extraordinary US race for the White House this year, which has arguably seen US politics be more polarised than in many years, has clear financial implications.

As the deadline draws near to voting in the US presidential elections this publication and its sister news service will track what either outcome – a win for Hillary Clinton or a Donald Trump – will mean for wealth management and investment. Donald Trump’s victory in Indiana and the near-certainty of him becoming the Republican nominee is already sending shockwaves around the political world. This publication takes no view on the candidate it prefers at this stage and the editors invite readers to comment. 

Dr Brendan Brown, Mitsubishi UFJ Securities
Plotting how the political “turbulence” ahead in the US will play out in markets and the global economy is a supremely hazardous activity. The Trump nomination means most likely that the main scenario for many becomes a Clinton-Sanders ticket winning in November (the best way to prevent Trump making inroads into Sanders supporters is surely for Clinton to take Sanders on to her ticket?) on a Progressive program of high-tax high-regulation Fed perpetual experimentation: a full win would mean taking back the Senate (and possibly even the House). In itself that main scenario is not likely to be positive for business spending in coming months (and nor are the outlier scenarios of a Trump win).

Fundamentally negative for US assets is the news that “yes, it can happen here”. For generations the view has been that the US is the most stable of all democratic systems and the most conducive to free enterprise and economic plus political liberalism. Yet now we find out that the essential fragility of all liberalism applies also to the US. A quirk in party rules can expose one of the two great parties there to a hostile take-over by a demagogue and eventual disintegration.

Many people around the world will simply turn off in coming months following the ferocious political brawling likely to dominate the US airwaves. It may be more peaceful to turn to the history TV channel until one finds some disturbing parallels to the present there! Why watch a spectacle of media personalities and Republican “quislings” all desperate to salvage their continuing careers through the present US political tumult. Let’s wait and see how it all turns out on Election Day.

The problem for market participants is that meanwhile prices adjust to the fluctuating probability of different scenarios which can be discerned through the brawls. The Federal Reserve may seem like an island of tranquility on the edge of all this, albeit that anyone with clear vision despite all the noise and fog can see that its top officials for the most part are set to welcome a Clinton-sanders landslide. Of course a steep plunge in temperatures across many still hot markets around the globe could shatter that tranquility and this might even trigger a Trump attack on Chair Yellen and her colleagues for their responsibility for the crisis. The spin from the Fed and the Clinton campaign in response would be to blame Wall Street and double up on their attacks there. Trump would also be on the attack against the same targets. Heads you lose, tails you lose – that is the present prospect for a deregulated free market regime and sound money

Tilney Bestinvest, the UK wealth management firm
So here we have it, controversial billionaire Donald Trump is now almost certain to be the Republican candidate in the race for the American presidency. That's incredible for someone who has never held elected office and who throughout the primary race the pundits and Republican establishment had repeatedly assumed would eventually burn out.

Politically this will pit the Republican's least popular candidate on record against Hilary Clinton - who also happens to be the least popular candidate the Democrat's have fielded, for job of leader of the free world.  While most polls currently point to a clear lead for Clinton, on the economy it is the businessman Trump who takes the lead with his campaign promise to "Make America Great Again".

At a time when investors see risk lurking everywhere from the state of the Chinese economy to a potential British exit from the EU, what should UK investors make of the race for the US Presidency?

In the UK it's mainly Trump's controversial views on immigration and aggressive style that have gained the spotlight. However Trump's views on the economy also represent a radical departure from conventional thinking and diverge deeply from the Republican party's historic support for free markets. Trump is at heart a protectionist who wants to impose trade tariffs, renegotiate NAFTA and who has lined up with the blue collar workers of "Main Street" against Wall Street. In this respect Trump, despite his personal wealth, is tapping into a deep well of anger over widening inequality as wage growth has lagged far behind asset growth. This is down to the twin forces of globalisation putting pressure on costs and jobs while Quantitive Easing has supercharged the wealth of those who own assets. These same concerns are fuelling anti-establishment movements across the globe.

There are clearly aspects of Trump's economic agenda which if enacted pose a real danger, in particular the potential to spark trade wars through the aggressive imposition of tariffs. Other aspects of his agenda, such as sweeping tax cuts, in isolation look very pro-growth.

Of course much of this could prove campaign bluster and it is also important to understand that the US system of government is very different to our own. Should Trump make the Presidency he will be constrained in enacting legislation by Congress which is loaded with the very establishment politicians he had railed against during the primaries and who have successfully clipped President Obama's wings.

Importantly the US has long had a powerful, independent central bank in the US Federal Reserve which by default is the leading provider of liquidity to the global financial system. Perceptions of where it is heading with US monetary policy drive the direction of the Dollar, the world's leading reserve currency, which has a knock on impact to the cost of capital across the globe. In the grand scheme of things what the Fed does is likely to be a bigger influence on global capital markets than what economic policies a future US President might seek to enact.

In this respect there is no need for UK investors to wait for the outcome of the US Presidential elections. The strengthening of the Dollar last year in expectation of the first US rate hike in nearly a decade has hurt US competitiveness, US corporate profits are slipping and the once buoyant US shale oil industry is rapidly contracting as the Saudi strategy of driving it out of business succeeds. US retail sales remain subdued.

In our view US shares are expensive at a time when the growth outlook is weak and the Fed has got itself into a no win situation where the markets don't believe the Fed's forecasts for rate hikes but where a shift to a more hawkish stance could prove very bad news for equities. So, our view is that investors should be underweight US equities irrespective of whether Hilary or The Donald make it to the White House.

Angel Agudo, Portfolio Manager of the Fidelity American Special Situations Fund
“The run-up to the US election and associated political uncertainty could potentially add to the volatility in the market; nonetheless, irrespective of who wins the US election, I do not expect wholesale policy changes. From a sector perspective, health care stocks could witness some volatility if there are further comments around pricing in the sector. However, I remain confident in the current health care holdings in the portfolio and also believe that companies that exhibit innovation will be able to keep their pricing power. The defence sector is also in the spotlight around elections, but this time, I do not see the defence budget as the focal point of any of the campaigns. On the whole, the short-term volatility in the run-up to the election can create buying opportunities and I remain committed to my investment process and continue to focus critically on long-term fundamentals.”

Aditya Khowala, Portfolio Manager of the Fidelity American Fund
Irrespective of who wins the US election, I do not expect to see any drastic shifts in policy. The focus will remain on the economy, where we are seeing some mixed signals. A combination of tightening liquidity conditions and falling inflation expectations continue to restrain the Federal Reserve’s ability to raise interest rates. There are also some indications that the banking sector could see sustained regulatory pressures. Going forward, there may be some room for fiscal policy to be used to support growth in the form of infrastructure and defence spending, which could create interesting investment opportunities. While there is true value in the cyclical parts of the market, it remains important to be very selective. The portfolio is built from the bottom-up and consists of businesses benefiting from long-term secular growth trends.”