The vibe on Wall Street post Donald Trump’s re-election: bring on the nice times.
“This election was about whether you were more fearful of 4 years of the identical or more fearful of 4 years of change,” Apollo Global (APO) co-founder and CEO Marc Rowan said at Yahoo Finance’s Invest conference, adding that the “market’s verdict’s been rendered.”
Added Rowan, “I feel this administration has a remarkable probability to essentially pivot the country to benefit from all of the inherent positives that we’ve got.”
Rowan’s optimism matches that of the market, with the S&P 500 rallying above 6,000 in the perfect post-election day melt up of all time. The rally is predicated partially on Trump policy proposals around making tax cuts everlasting and loosening regulations, experts say.
But that rally and optimism could also be ignoring a tariffs-led headwind.
The highest 100 firms within the S&P 500 by market cap get 8% of their revenue on average from China. If Trump’s proposed 60% tariff on Chinese imports involves fruition, profit margins and stock prices could slip, though it’s more likely tariffs will double from current levels, based on Bloomberg Economics.
It’s a priority echoed by Deutsche Bank chief US economist Matthew Luzzetti on Yahoo Finance’s Opening Bid podcast (listen in below).
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“Markets are telling you roughly Donald Trump means somewhat good for growth, somewhat inflationary,” Bridgewater Associates co-chief investment officer Karen Karniol-Tambour said at Invest, warning that immigration restrictions and a lift to the deficit are inflationary.
To grasp when the deficit devil over the shoulder becomes a zombie in front of you, BlackRock’s Rick Rieder watches foreign demand at Treasury auctions. Despite these risks and elevated equity multiples, he’s still bullish.
“The technicals for equities are crazy… crazy good…I’ve learned over my profession the technicals win. You understand, even for those who consider in the basics, the technicals win more,” Rieder said at Invest.
An easing cycle from the Federal Reserve that the market believes could bring the US to a soft landing also doesn’t hurt. Though Judy Shelton, a former economic advisor and Trump appointee to the Fed, didn’t need to throw the Fed a victory party any time soon.
“We’ve passed through the worst inflation in 40 years and in terms of accountability… I don’t think that anyone got fired on the Fed,” Shelton said on the conference, who also called into query the Fed’s role moving forward.
“I feel that is an interesting time when persons are taking a look at the suitable role of the Federal Reserve… and perhaps rethinking whether we would like…the rate of interest… the value of capital — do we would like that to be set by a dozen people voting eight times a 12 months?,” Shelton said, adding she can also be optimistic on the following Trump presidency.
