Trump won the Presidency, Republicans won the Senate and the jury still out on the House.
Our macro models stayed bullish through the pre-election jitters and all VGA strategies are close to maximum long. Should be a great day for investors! In addition to overwhelmingly positive seasonality we previously posted for Nov & Dec (following strong performance thru October), the market set up was bullish as its overbought condition was worked off in late-October and early November, setting the stage for a year-end rally.
Shown below (first chart), the market clearly favored a Trump win as the S&P rallied into increased odds of a Trump win. Why ... Earnings! Trump's policies favored lower taxes and less regulation while Harris' favored the opposite. According to a study by Ned Davis Research, Harris' corporate tax hike proposal could have decreased S&P 500 after tax earnings by 9% while Trump's tax cut could increase earnings by 5%. Source: Bespoke
The second chart below, shows sector performance after Trump won in 2016. Financials were the big winner, but Industrials and Comm Services did well. We have been overweight Financials, but think Tech & Utilities will continue to perform well as the AI revolution and power demand continue to play out.
Source: Bespoke
We'll have to see how Trump's proposed tariffs play out, but his prior administration was good for the economy, consumers and the stock market (see tables below).
Source: VGA, data sourced through Bloomberg
GDP: annualized average
Inflation: annual average of CPI
Unemployment: average U-3 BLS.