Resounding Trump Win Unleashes Massive Risk-on Trade

Trump secures a victory, the Senate flips red, and markets celebrate

Highlights

• Trump secures a victory, the Senate flips red, and markets celebrate

• The election cycle is no match for the business cycle

• Consumer frugality continues to dominate earnings reports

• The Q3 survey data and Beige Book are consistent with an economy that lost all momentum

Key Takeaways

Donald Trump Re-Elected

• Donald Trump has been elected again as President, securing 276 electoral college votes compared to 223 for Kamala Harris. And the GOP also managed to flip the Senate in this lopsided victory. The House is still up for grabs, mind you (the Republicans had a 220-212 majority heading into the election).

Markets Respond to Trump’s Win

• A major point to be made is that we will not have to endure weeks or months of a contentious and contested election and all the uncertainty that would have implied. A sigh of relief from that alone. That said, this is more than a relief trade — this is a power trade on steroids.

Dollar Surges on Tariff Fears

• The markets have gone ahead to price in a full four-year term, with hopes of deregulation and corporate tax cuts fuelling even more optimism in the stock market, visions of an $8 trillion borrowing spree and the overall pro-growth policy thrust are causing a coronary in the bond market, and a looming global tariff war is taking the U.S. dollar up to a one-year high.