I’m surprised both that Trump won the election and that he, and Republicans in general, did it so handily.
As a professional investor, the most important issue, I think, is not what I might want/like to happen but what I think will happen given the factual economic circumstances.
What jumps out to me in financial market so far is that Russian stocks are up sharply. As far as the domestic market is concerned the two big winning indices so far are the Dow and the Russell 2000. The latter is filled with smaller companies whose main focus is on domestic revenues and earnings. The former is a mish-mash of aging stalwarts from a half-century ago, with newer blood injected by the index’s owner, S&P. It too has a more significant focus than the S&P 500 on mature, US-centric companies.
Put a different way, it’s the US multinationals, who have a global focus rather than a concentration of domestic assets and earnings, that are lagging.
Cryptocurrencies are up a lot, too, as is TSLA, presumably a result of the strong influence Elon Musk et al are expected to have over the incoming administration.
A key issue is how much of the economic agenda Trump espoused on the campaign trail will be enacted. The three big ones that I see are: tariffs, tax cuts and deportation of foreign-born workers. The first and last will in all likelihood depress economic growth. Extension of the tax cuts for the wealthy enacted during Trump’s first term will likely make the federal budget deficit worse–and give more impetus to the world’s desire to find an alternative to the dollar as the basis of global finance.
The question for us as stock market investors is what companies will prosper in this environment.
More tomorrow.