“If Clinton had won, we'd have a much narrower ban of probable outcomes.” Remember that statement.

You may just hear it many times as analysts, in this case James Barrineau, co-head of emerging market debt for Schroders, struggle over the next year to spot the opportunities in a uniquely complex post-election climate.

Prior to the U.S. presidential election, there were enough conditions to rattle the most grounded forecasters, with QE 2 easing to a halt and interest rates expected to subsequently glide (or shoot) up, and an extreme reaction expected from the bond market, with credit markets already jumpy from escalating consumer credi-card debt and mortgage payment defaults on the rise.

But with Donald Trump's upset win over Hillary Clinton, the picture has expanded with a litany of new variables. Trump wants to spend, says Barrineau, on infrastructure, on job creation and a replacement for Obamacare -- at an estimated additional cost of $550 billion over the next 10 years, according to the Committee for a Responsible Federal Budget. And, the president-elect is talking fiscal shifts that would further strengthen the dollar.

“A strong dollar is bad for equities and debt” and manufacturing, Barrineau pointed out during an interview at Schroders' recent annual press conference in London.  A stronger dollar will create more currency volatility. “It weakens the fundamentals of emerging markets and you get into this negative cycle.” EM currency bonds “took off,” after the dollar stabilized during 2016, their prices rising 16 percent in the month before the election, he cites. But in just one week following the election EM had the biggest outflow in history. “It shows how quickly people respond to these negative effects,” says Barrineau.

“There's lots of speculation on how much debt we may see. And, the market may have gotten ahead of itself.” With all that said, Barrineau sees opportunities in non-investment grade sovereign debt.

“We think it will rise,” says Barrineau.  who is holding less local currency in favor of short duration dollar bonds -- seven-years and less. They like non-investment grade sovereign bonds because they offer the greater risk premium, he says. It depends “on how protectionist policies shape up -- if they come to pass,” says Barrineau.  Counter to a market poised to react to Fed chair Janet Yellen, he says, investors should have more exposure to credit risk than interest rate risk. “If the wall, infrastructure jobs -- any additional fiscal spending that could prove inflationary -- comes to pass the Fed will be move more aggressively,” he says. “And, that's what the market is seeing now.”

Where to buy short-duration debt? Asia is particularly vulnerable to a strong dollar because it relies on manufacturing exports of low-cost goods to the U.S. If Trump goes ahead with protectionist policies they could lose out. Speaking of “the Wall”, Schroders doesn't own any of Mexico's pesos right now, consistent with its strategy to own less local currency. Like Asia, it is dependent on exports -- 71% -- to the U.S., he says. “There is not a lot Mexico can due from its own policy standpoint to mitigate significant policy change in U.S.” The shorts on the peso, he noted, had plateaued by the post election week, but “they can always go lower.”   

His position on Colombia was pending OPEC, which did act to restrict the oil supply, boosting the price of oil for now.   

Alex Tedder, Schroders head of global equities, and Matt Ward, U.S. equities fund manager, were watching equities outperform and anticipating the markets' immediate post-election ebullience to continue, while unsure of whether the rest of the world markets would follow.  

They expect Trump's promises of lower regulation to make financials “look better” and encourage more credit growth, said Ward.

With infrastructure spending expected to gain from the election, Tedder and Ward were already invested in companies such as giant industrial tool maker Ingersoll Rand and engineering companies. They expect railroads, building materials companies, commodities suppliers, especially copper, any modular builders, and most companies that respond to infrastructure stimulus to do well.  

“The smart bets are on companies like Caterpillar,” he says, which took out nonprofitable businesses during the downturn and trimmed expenses. Although, if the new administration proves “disruptive to trade, we may find them more exposed to domestic than international markets,” he adds. And there will be more drilling. “Capex Mining (an Australian company) can't go from high to low for long,” he teased. “In this case, we have to buy equities with equities up.”  

More interesting than GDP growth, they say, are the growth possibilities in the repatriation of $1.2 trillion in trapped cash overseas. And, they noted, funds are packed with cash positions. [Trump,] “now has a mandate,” says Ward. “With a unified government there is much more potential for change to take place.”