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The U.S. election has ended, and former President Donald Trump is on his way to the White House, bringing with him a strong Republican majority in the Senate and at the time of this writing likely a narrow margin in the House. As the nation prepares for potential shifts in fiscal policy, energy, trade, and regulation, markets have responded with significant gains in U.S. equities, a strengthening dollar, and rising Treasury yields.
As we’ve emphasized before, it’s wise not to react impulsively to headlines, as markets are forward-looking and quickly factor in new information. Given the magnitude of potential changes, this is a crucial moment for investors to assess and optimize their strategies that align with the overall financial goals and plan. At Intelligent Investing, we are here to help navigate these shifts with a focus on minimizing taxes, unifying financial goals, and leveraging technology to enhance decision-making.
Initial Market Response to the Election Results
Early market reactions signal that investors are anticipating a pro-growth, pro-U.S. outlook. S&P 500 futures surged by over 2%, and small-cap stocks rallied to one-year highs. Bond yields and the U.S. dollar are up, with the 10-year Treasury yield rising as investors brace for a more expansive fiscal policy. This election result has effectively reduced uncertainty, and as the dust settles, it’s clear that markets are focusing on opportunities for growth rather than on potential tariff or deficit risks.
Key Policy Shifts: What to Expect in a Second Trump Administration
- Tax Cuts and Fiscal Policy
President Trump has consistently emphasized tax reductions, which he aims to expand with congressional support. While an extension of the Tax Cuts and Jobs Act (TCJA) is expected, further cuts, potentially on corporate taxes, are likely to be prioritized. Such measures could stimulate corporate earnings and, by extension, bolster stock performance, particularly in sectors with substantial tax liabilities. - Trade and Tariffs
The second Trump administration is likely to implement new tariffs, with proposals including a 60% tariff on Chinese imports and a 10-20% tariff on a broader range of products. While these measures aim to strengthen domestic production, they could also increase the cost of goods and potentially contribute to prolonged inflation. This policy pivot could encourage a continued “America First” stance, with both economic and geopolitical implications. - Energy Sector and Deregulation
We may see deregulation efforts, particularly in banking and energy. Trump’s administration aims to roll back certain banking regulations and ramp up domestic energy production. However, given the all-time highs in U.S. oil and gas output, additional increases may take time. While scaling back certain parts of the Inflation Reduction Act may be considered, comprehensive repeals are unlikely. Nevertheless, this move could shift investment opportunities within the energy sector, particularly for traditional energy assets over renewables. - Long-Term Outlook for Inflation and Interest Rates
With persistent inflation, prices are expected to stay higher for a longer period. This can impact the cost of everyday goods and services. To keep up with inflation, interest rates are rising, and the bond market is feeling the effects: longer-term bonds are becoming less attractive because they lock in lower returns compared to shorter-term options. For investors, this environment calls for a flexible approach to bond investing, carefully selecting bonds that offer value despite these challenges.
At Intelligent Investing, we advocate for a diversified approach that blends high-quality credit with medium-term bonds to manage risk and provide stable income. Our strategies are always designed with your unique goals and financial plan in mind, allowing us to build a portfolio that aligns with and supports your financial future.
Implications for Your Financial Plan
As the holidays and January 20th approach, you still have time to leverage year-end tax planning to strategically align your investment portfolio with anticipated policy shifts. We encourage our clients to review their financial plans, particularly in light of potential tax law changes and market volatility. Our proprietary Intelligrations® financial software helps simplify complex financial information, integrating technology to maximize decision-making efficiency and minimize tax impact.
At Intelligent Investing, we take a holistic, fee-only approach, ensuring that every recommendation aligns with your unique goals and objectives. We invite you to take advantage of these critical final weeks of the year to position yourself for success as we navigate the new administration’s policy landscape together.
If you’re looking to secure your financial future in this new era of political and economic change, now is the time to act. Contact Intelligent Investing today, and let’s work together to create a strategy that minimizes taxes, maximizes potential, and keeps your financial goals front and center. Don’t wait—reach out to us before the end of the year to make the most of the current planning opportunities.
With our commitment to transparency, technology, and expertise, Intelligent Investing is here to guide you through this new chapter with confidence. We look forward to the opportunity to make sure your finances are as prepared as you are for what’s next.
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