Understanding This Week’s Markets: November 17, 2024

The Trump Effect

Just a few things have modified on the earth since I last wrote a “Making Sense of the Markets” column just a few weeks ago. Republican control of all three levels of the American federal government (assuming current vote counting patterns hold) has driven stocks higher. This week the S&P 500 rose above 6,000 for the primary time, the Dow Jones Industrial Average hit 44,000 and even our own TSX hit an all-time high of 25,000. It seems that investors really like the thought of ​​uncontested elections, the dearth of riots within the White House and the promise of massive tax cuts.

There are many theories about how President-elect Donald J. Trump’s policy guarantees will affect markets all over the world. With the large caveat that a lot of these campaign guarantees are unlikely to be fully implemented, here’s a quick have a look at the more outstanding market news that can emerge from the election:

• With Trump as president, Bitcoin could proceed to skyrocket because of manic trading behavior. Cryptocurrency lobbyists paid greater than $119 million to make sure Trump pushes his product(s) “to the moon.” They hope that theirs Bribes Bets can pay off.
• Despite making electric vehicles, which Trump once claimed to hate, Tesla (TLSA/NASDAQ) shares are set to rise based solely on the incontrovertible fact that CEO Elon Musk has Trump’s ear. Tesla’s stock price has risen greater than 30% since Election Day.
• Trump Media & Technology Group Corp. shares (DJT/NASDAQ) continued its rise because the official meme stock of 2024. The company is once more price greater than $6 billion, despite not making profits or having an actual plan to supply profits in the longer term.

Many Canadian small and medium-sized businesses are raising concerns about Trump’s promised tariffs of 10% to twenty% on all goods made outside the United States. However, I would not bet on Canadian oil and natural gas becoming the goal of tariffs, considering Trump’s recent national security adviser married to the Vice President of TC Energy Corp.

One could also argue that the general effect of a bubbling deficit-driven U.S. economy (stuffed with overloaded consumers buying Canadian goods) could offset the tariff threat on the whole Canadian economy. However, for a lot of countries in Asia this may increasingly not be the case.

Andrew Tilton, Goldman’s chief Asia Pacific economist, recently highlighted Korea, Taiwan and Vietnam may very well be the toughest hit, together with China, Trump’s favorite goal of tariffs.

Personally, I believe if there’s one thing we have learned from this yr’s elections all over the world, it’s that the majority people do not know how inflation works – and that they really hate the fee of things at once. These strong voter emotions will likely place an inflation-backed cap on how high Trump can push his tariff agenda.

While “tariffs” may possibly be Trump’s favorite word, “inflation” might be not on his radar. The Tax Policy Center and the Peterson Institute for International Economics predicts that the everyday U.S. household would pay nearly $3,000 more per yr if it imposed a 20% global tariff combined with a 60% tariff on Chinese goods.

Of course, it is important to notice that every one of this information was likely priced into the market in the times following the election. So when you’re planning on capitalizing on the “Trump Trade,” you are almost definitely late to the party.