📊💵🤔US Presidential Election Results: What Trump’s Policies Mean for the Stock Market | Andrew Baxter

Summary

This video delves into the current U.S. economic landscape, examining how tariffs, interest rates, and strategic policies influence various sectors like real estate, financial services, and utilities. The discussion highlights how tariffs can promote local manufacturing, the impact of a stronger economy on stock market performance, and the potential slower pace of interest rate cuts. The video also explores the historical performance of the stock market post-presidential elections and discusses future priorities for economic policies, including energy infrastructure and inflation control. Insights on the correlation between crypto markets and equities are also explored.

Takeaways

• 😀 Tariffs can be used strategically to promote domestic manufacturing and job creation, helping the economy in certain sectors.
• 😀 The recent market rally reflects a stronger US economy and the performance of US-based businesses, particularly in sectors like real estate, utilities, and financials.
• 😀 A stronger economy could lead to slower interest rate cuts, affecting bond markets and treasury yields, which could disrupt expectations for bond price movements.
• 😀 Real estate performance is influenced by a supply shortage and housing approval challenges, with long-term fixed-rate mortgages preventing homeowners from moving when interest rates rise.
• 😀 The financial sector benefits from higher interest rates, as banks profit from the wider margin between lending and savings rates in a strong economic environment.
• 😀 Utilities and energy sectors stand to benefit from infrastructure investments, especially in areas like California, where grid upgrades are needed to support growing energy demands and net-zero goals.
• 😀 Interest rate cuts may be delayed due to a stronger economy, meaning inflation could remain higher for longer, which affects bond market expectations and yields.
• 😀 Historical data suggests that equity markets tend to perform well after presidential elections, with the S&P 500 typically gaining 11% in the year following the election.
• 😀 The reduction in political uncertainty post-election is a major factor in the market rally, as the clarity of outcomes allows investors to plan and adjust their strategies.
• 😀 A stronger equity market could have a positive impact on cryptocurrency markets, especially Bitcoin, which has a strong correlation with the Dow Jones Industrial Average.
• 😀 The current political landscape, with a more defined leadership after the election, could lead to smoother economic policies and continued market strength in the future.

Q & A

How do tariffs play a role in shaping the U.S. economy and job market?

Tariffs are used as a strategic tool to encourage onshoring of jobs and manufacturing in the U.S., potentially creating more local employment. While tariffs can raise prices, they also incentivize businesses to produce domestically, thus strengthening the economy and creating jobs, especially in swing states like Michigan and Pennsylvania.

What was the impact of the economic policies discussed on U.S. stock market performance?

The stock market has performed well, particularly in sectors such as real estate, utilities, and financial services. A stronger U.S. economy, with higher interest rates and tariff policies, has led to positive investor sentiment, driving up stock prices in these sectors.

How do real estate and utilities sectors benefit from economic growth?

Real estate benefits from higher demand due to stable housing markets and infrastructure investments, while utilities see growth due to the need for significant upgrades to power grids, particularly in states like California, to meet increasing energy demands, especially with the shift towards electric vehicles.

What is the expected effect of interest rates on the economy and the stock market?

Interest rates are expected to rise more slowly due to a strong economy. This slower rate cut could lead to higher yields in bonds and a delay in the anticipated drop in bond prices. The rise in rates tends to benefit financial services, particularly banks, due to the wider margin between lending and savings rates.

Why is the political climate important for the stock market?

Markets dislike uncertainty, and with the election result now settled, there is more clarity in policy direction. This stability reduces risk and boosts investor confidence, which typically leads to stock market gains, especially in the 12 months following a presidential election.

What is the historical relationship between U.S. presidential elections and stock market performance?

Historically, the S&P 500 has seen an average gain of about 11% one year after a presidential election, reflecting the market's tendency to perform well when uncertainty is reduced and economic policies are implemented.

How are energy and infrastructure policies expected to impact U.S. markets?

Energy policies, particularly the push for net-zero goals and electric vehicles, will drive significant investment in infrastructure, especially in utilities and energy sectors. This is necessary to modernize power grids and meet the growing demand for clean energy and EV infrastructure.

What are the key economic policies expected from the new U.S. administration?

The new administration is expected to prioritize border control and energy policies. These policies, especially those targeting energy infrastructure improvements and potentially lowering inflation, will likely have significant impacts on the broader economy.

How does the stock market's performance relate to the crypto market?

The cryptocurrency market, particularly Bitcoin, has shown a close correlation with the stock market, especially the Dow. A stronger equity market tends to boost crypto prices as well, suggesting a continuation of positive momentum in both markets.

Why might tariffs not necessarily lead to inflation?

Tariffs can be used strategically not just as a punitive measure, but also as an economic tool to steer manufacturing and create jobs domestically. By encouraging onshoring, tariffs can stimulate local production without necessarily causing inflation, if managed properly.