Marc Faber, editor and publisher of the Gloom, Boom & Doom Report, says the 'obvious' trade in the wake of Donald Trump’s surprise victory is for savvy investors to buy Russian stocks and other Russian assets.
"The obvious trade with a Trump victory is to own Russian and Kazakhstan assets, bonds and equities," he told CNBC. "That is the obvious trade for the simple reason that Mr. Trump has a more benign view of the world and respects the perspective of foreign leaders," Faber said.
Faber also predicted that commodities and emerging markets should flourish under Trump. With robust infrastructure spending in Asia, "within the stock market ... anything that is commodity-related will do well," Faber said.
However, Faber warned American investors to be cautious.
"In the U.S. we have a fully priced stock market ... the large bargain you can find is in emerging markets in my opinion," Faber said.
As for the Trans-Pacific Partnership, which Trump opposed, Faber believes it is “off the table.”
"But," he noted, "many Asian countries were not all that much in favor of TPP to start with ... so I don't think that it's a negative."
To be sure, Wall Street traders didn't know how to react to Trump's victory, a result that few strategists, investors and economists took seriously in their preparation for the election, CNBC reported.
Traders rushed into safe havens such as gold and U.S. Treasurys, but many simply did not know what they would do when trading opened Wednesday, because of the uncertainty about the New York businessman's policies.
After dropping sharply as results trickled in indicating that the Republican standard bearer had a widening path to victory, trading rebounded. The Dow Jones industrials plunged 800 points in futures trading in the wee hours of election night, but climbed back as markets opened. It kicked off down roughly 30 points, before rising slightly in early market trading. The S&P 500 also rebounded after falling 5% in the aftermath of Trump's triumph. The index was up 0.5% in early morning trading.
Trump's unpredictable pronouncements and opposition to free-trade agreements have made the real estate mogul unpopular with many financiers, who fear that he could disrupt global trade and damage geopolitical relationships.
Most investors were positioned for a Clinton win and a continued rally in stocks, the manager said.
"The positives of a Trump win are corporate tax reform, but the negatives are protectionism, and that is a really big thing," said Brian Kelly of Brian Kelly Capital. "More importantly what's he going to do with the Federal Reserve."
Kelly said he was likely to stick to macro-economic trades Wednesday and buy some gold. He said the "buy-the-dip" playbook of the equity bull market is likely out the window Wednesday for him and most traders.
"You got to let the market wash itself out. Maybe take a shot [at some stocks], but have to see how this washes out. The stocks to buy would be fiscal stimulus plays, the infrastructure plays, the GEs," Kelly said.
(Newsmax wire services contributed to this report).
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