It’s kind of wild to think that a week ago, after anticipating a drawn out election vote counting process like in 2020, the US woke up to a decisive electoral victory by Trump.
If you were like me and decided to stay up late Election night and watched the results unfold live, then you may have also seen the overnight surge higher in the S&P 500 and other broad market indices. I even wrote an ES futures report at 1:20 AM Eastern capturing it!
These presidential election results were alongside Republicans winning a majority of Senate seats, and last I checked there’s still votes being counted for the final House of Representatives final tally.
So a week out you from all the drama, you may be wondering about a few key financial market metrics associated with these results, and here are my answers (remembering I do not have a crystal ball):
Q1: Hima, will the stock market rise we have seen since Election night persist?
A1: With Trump’s win and what is lining up to maybe be a Republican majority for all of Congress, I think that the mandate that Trump has could get deployed sooner than later. We’re talking about deregulation, tax cuts, and easing global conflicts. So I do think that this strength will persist broadly.
Q2: Should I buy dips or watch for the stock market to put in a major top?
A2: With the Wall-Street-friendly policy changes that are expected, and hopefully the calmer waters on the international conflict front, I think it would be safer generally to buy dips. This gets specific to individual sectors, industries, and tickers, but yes generally over the next 6-8 months buying dips should be the reliable bet. NOTE I am no longer one for long-term forecasts, so if you want to know where I’m at on this at any given movement, it’s best to read my weekly and daily S&P 500 reports (part of S&P Edge Pro). Also I do think there will be more substantial dips then others, and this is where my friend Bill’s VIZ Wizard indicator (that I’ve got set up and running like many of you) could signal complementary opportunities to my current trading approach. Meaning, while I continue to daytrade ES futures, there would be substantial VIX moves prime for options swing trading setups.
Q3: How might the oil market be affected?
A3: Given the Trump team’s “drill, baby, drill” motto, I think there will be an early concerted effort to increase domestic production of crude oil. NYMEX crude oil futures (symbol CL) have been consolidating all year, however if production should pick up as planned, we could be on our way back toward $40 per barrel oil. This will likely take time, I’m talking months and months from when Trump actually takes office again on January 20, 2025. Meanwhile I’d watch the range unless and until there’s a decisive break in either direction.
Don’t Forget the Fed!
Trump winning in such a landslide is just the first step for his second administration. There’s still a lot of work to be done, and with the overwhelming win plus winning a popular vote, I believe there’s a significant mandate for him, a tall order to fill in order to take action. He’s building his cabinet, making his appointments, and we’ll see what unfolds.
While the election was the sexy hot topic last week, and still is, don’t forget about the Fed! There was a 25 basis point rate cut on Thu Nov 7th. With inflation having slowed per the Fed’s view of the data, Chair Powell is focused on the jobs market.
I still take issue with looking at it the job market as one being, and the election stats align with my sentiment. I think this line for an Associated Press article shares it well:
“The political divide between higher-income and lower-income Americans was stark, with Trump gaining slightly among voters whose household income is less than $100,000 per year, while Harris held steady with voters who make more than that.”
What this tells me is that the economy and the jobs market are still bifurcated, and affecting people in very different ways depending on where they reside especially on which side of that 6-figure income mark.
I also don’t trust that the jobs market is as strong as is generally spoken of because of how many government jobs can get easily added in any cycle that then inflates the near term numbers. So I suspect we’ll see revisions downward. And if Trump and his team have their way with the new D.O.G.E initiative, creating a Department of Government Efficiency, then what the jobs distribution in the US between private vs public will likely look extremely different in his administration then it has under Biden.
Either way it’s an exciting time to be alive, and to be a trader!
~Hima
Leave a Reply