(CNN) – On Wednesday morning, my inbox was filled with notes from analysts eager to talk about the positive side of the election for various sectors. Financial stocks, like banks and credit card companies, are poised to thrive. The same goes for private prisons and companies that are expected to eventually help carry out mass deportations. Cryptocurrency enthusiasts were especially strong, celebrating the success of the candidate who gave them promised the moon.
When the New York Stock Exchange opened, the enthusiasm for these so-called Trump operations was shot. All three major indexes soared, a sign of investors’ relief at a quick victory. The Dow Jones had one of its best days in history. Bitcoin soared to a new record above US$75,000.
It is possible to interpret the market reaction as a kind of validation of the authoritarian proposals of the president-elect. (And yes, it does seem like classic Wall Street insensitivity to see some people tout the benefits of a campaign that has threatened political opponents and journalists with violence).
But traders are generally just doing what they do: spotting potential profits they can cash in in the coming days and weeks.
When you step back from the hubbub, many of those same traders will tell you that the long-term outlook for the stock market is uncertain at best.
“People don’t like to miss out on profit opportunities, so they rush to buy things they can sell quickly before everything falls apart,” Daniel Alpert, managing partner at Westwood Capital, told me. “There is still significant volatility in this market… And I think we will still see a significant unwinding of these trades as the news begins to emerge.”
Markets tend to favor a stable and largely predictable macroeconomic environment. The more gridlock in Washington, the better, if you ask Wall Street. Because nothing destabilizes a portfolio like a sudden move—like a rise in inflation, a spike in unemployment, or a new policy announced in a Truth Social publication—that could send ripple effects through the market.
Part of the rally is simply because big money managers had been aggressively taking chips off the table in the weeks before the election, Alpert and others said. Wednesday morning brought an unexpectedly unambiguous result.
“We were going to have a positive reaction today regardless of who won,” Art Hogan, chief market strategist at B Riley Wealth Management, told my colleague Matt Egan on Wednesday. “There is clarity… The market is breathing a big sigh of relief because of that.”
If Trump follows through on his campaign promises, we can expect a larger deficit, rising inflation, and deportations of workers that, in addition to being cruel and immoral, would also result in a drastic drop in economic growth.
“All of that doesn’t bode well for the future,” Hogan says. “But the future is not now.”
In other words, lock in those profits while you can. Because when the reality of Trump’s economic plans sets in, everything will change once again. And by all indications, his proposed changes would put the world’s largest economy in uncharted territory that will almost certainly drive inflation higher.
Among those proposals are blanket tariffs on imports, forcing U.S. companies to pay more for critical supplies and raising costs for consumers. Virtually all mainstream economists oppose tariffs of that magnitude and expect them to cause a further rise in inflation.
“My worst-case scenario is that he actually succeeds with his blanket tariff policies,” Alpert told me. “If the House goes Republican, there will be absolutely no limit to the tariff policy Trump can enact… and to the extent he does, he will create the worst of both worlds, with higher domestic prices for goods and some services.” , and without general improvement in the employment outlook.”
Market Madness and Mirth: A Comedic Commentary
Ah, elections! That grand spectacle where the results send hearts racing and wallets trembling. As CNN revels in the financial fireworks, it seems that our dear analysts have had a magical morning after the election. My inbox, too, wasn’t filled with sweet nothings; no, it looked like a piggy bank that just got smashed, with messages darting around like over-caffeinated squirrels!
Financial stocks are getting all gleeful, like a dog with a new bone: banks, credit card companies, and even private prisons (yes, you heard that right) are expected to cash in. Who needs to pay for a ticket to watch a circus show when you can just observe the ‘Trump operations’ spectacle from your desk? It’s retail therapy for the stock market, and oh boy, is it shopping season!
We saw the New York Stock Exchange open its doors like a grand casino, with traders throwing chips into the air in wild abandon. “Look! Bitcoin’s shot past $75,000!” they shriek, dancing with joy as if they’d just won the lottery. But let’s take a beat – isn’t it similar to celebrating in a burning building? “Hey guys, we can save it with more Bitcoin!” Cue the sound of facepalms resonating across Wall Street.
Now, here’s where things get a tad murky. Analysts are interpreting the market’s jubilant reaction as a ringing endorsement of good ol’ authoritarian charm. You know, the kind that makes you question whether the stock market is the true voice of the people – or just a very wealthy person shouting, “Look at me!” while the rest of us desperately try to purchase earplugs.
Let’s be real; traders aren’t much different from kids in a candy store. They see potential profits and rush in faster than you can say ‘irrational exuberance.’ Then again, step back and you’ll hear them whisper, “But wait! Is this actually sustainable?” It’s the classic conundrum of gambling with your future while considering your retirement plan during dinner.
Daniel Alpert, managing partner at Westwood Capital, made a note that’s practically shining with wisdom: “There’s still significant volatility,” he says, almost like he’s discovering the gravitational pull of a black hole. I mean, come on, doesn’t he realize that uncertainty is Wall Street’s favorite flavor of ice cream? The worse the reality, the bigger the bell curve of potential profits!
And oh, the things traders will say to legitimize a market rally! “We knew we’d have a positive reaction no matter who won,” exclaims Art Hogan, chief market strategist at B Riley Wealth Management. You have to admire that optimism—it’s like saying that regardless if the football team loses by 100 points, at least they showed up in their snazzy new uniforms!
But just imagine: if Trump’s ideas take flight, we’re in for an economic ride that should come with a warning label. “Fasten your seatbelts, folks! Expect larger deficits, rising inflation, a drop in economic growth, and workers being unceremoniously deported.” A real party popper, isn’t it? If you’ve ever wanted to know how to ruin a barbecue, just serve that menu!
As we head down this rabbit hole of tariffs and trade spin, the economy might just emerge with a funny little hat and a whole lot of confusion. Alpert warns us, “If the House goes Republican, hold onto your wallets, because it could get hilarious—er, I mean catastrophic.” You can almost hear the cautious investors whispering, “Please tell me there’s a safety net somewhere in this circus act.”
So, dear reader, if you hold stocks, it might be wise to lock in those profits while they last. Because once the glittering reality of the proposed changes makes its grand entrance, it could very well be time for market gymnastics—twists, turns, and a whole lot of people falling flat on their faces!
In conclusion, as we witness this fascinating interplay of politics and profit, let’s keep the popcorn close—it’s destined to be quite a show. Just remember, even if the stage looks well-lit today, the behind-the-scenes chaos could turn this theater into a horror show faster than you can say, “What’s wrong with My IRA?”
Stay tuned, keep your sense of humor intact, and may your investments thrive like your favorite form of comedy: outrageously unpredictable!
(CNN) – On Wednesday morning, my inbox overflowed with enthusiastic messages from analysts eager to discuss the optimistic implications of the election results for various sectors. Financial industries, notably banks and credit card firms, stand ready for significant growth. Similarly, private prison companies and those involved in future mass deportations are also expected to benefit. Meanwhile, cryptocurrency advocates celebrated the substantial victory of a candidate who has notably championed their cause, even promising them untold riches.
When the New York Stock Exchange opened, the excitement surrounding these so-called Trump operations was palpable. All three major U.S. stock indexes surged skyward, signaling investors’ relief at the swift and clear election result. The Dow Jones Industrial Average recorded one of the most impressive single-day gains in its history, while Bitcoin surged to an unprecedented value, eclipsing the US$75,000 mark.
Some analysts are interpreting the market’s buoyant reaction as a form of endorsement for the authoritarian policies proposed by the president-elect. It is worth noting that this Wall Street reaction demonstrates a certain insensitivity, as investors laud the benefits of a campaign marked by threats against political dissenters and journalists.
“People don’t like to miss out on profit opportunities, so they rush to buy things they can sell quickly before everything falls apart,” explained Daniel Alpert, managing partner at Westwood Capital. “There is still significant volatility in this market, and I anticipate that we will witness an unwinding of these trades as new information surfaces.”
Markets generally favor a relatively stable and predictable macroeconomic climate. If you ask Wall Street, more gridlock in Washington translates to better outcomes. After all, nothing can disrupt a robust portfolio quite like an unexpected economic shift—ranging from inflation surges to unemployment spikes or sudden policy announcements via unique channels like Truth Social—that could send shockwaves through the market.
Part of the recent market rally can be attributed to major financial managers who were prudently pulling back investments in the weeks leading up to the election. The unequivocal results delivered on that Wednesday morning took many by surprise.
“We were going to see a positive market response today regardless of the election outcome,” noted Art Hogan, chief market strategist at B Riley Wealth Management. “The clarity provided by the quick results enabled the market to breathe a collective sigh of relief.”
If Trump adheres to his campaign assurances, we might see an increase in the federal deficit, escalating inflation rates, and the deportation of workers—actions that would not only be ethically questionable but also likely diminish economic growth.
“All of this does not bode well for the economic future,” Hogan cautioned. “However, the consequences of these policies are not immediate.”
In essence, it is advisable to secure profits when possible, as the impending reality of Trump’s economic strategies could lead to a profound and turbulent shift in the markets. Indications suggest that his proposed changes will navigate the largest economy into unfamiliar territory, likely accelerating inflation rates.
Among Trump’s proposals are sweeping tariffs on imports that could compel U.S. firms to incur higher costs for essential materials, ultimately raising prices for consumers. The vast majority of mainstream economists resist tariffs of such scale, predicting that they would contribute to an even greater rise in inflation.
“My worst-case scenario is that he actually succeeds with his blanket tariff policies,” Alpert expressed. “If the House aligns with Republicans, there will be no horizon to the tariff initiatives Trump could implement… This could generate a worst-case scenario of rising domestic prices for goods and services, all without any substantial progress in job creation.”
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In the face of such uncertainty, market participants should brace for a rollercoaster ride ahead. While the initial euphoria may paint an optimistic picture, the underlying tumult could lead to unforeseen dips and dives. Therefore, investors may want to keep their helmets on and ensure they have a sturdy plan before boarding this shaky economic carousel.
