Election Update: What To Expect For Investments

The voters have spoken, and Donald Trump is headed back to the White House. He even has both the Senate and the House of Representatives on his side. Markets are moving higher now that the election is behind us, and we head into the Holidays, which are a historically seasonally strong period as momentum builds into year-end.

As we enter 2025, there are some interesting cross currents to keep an eye on, with a heavy focus on fiscal policy.  Congress will have to deal with the debt limit, the 2025 and 2026 budget funding, and the expiration of our current tax code at the end of 2025.  All of this at a time when the federal debt is currently sitting at 36 trillion dollars and growing quickly. 

For now, markets are in rally mode, with some of the riskiest assets making up some ground.  Small caps have up until the election had lagged large caps this year by almost 10%, but in the last month, small caps are up more than twice as much as large caps.   This comes as longer-term interest rates are rising, indicating expectations for stronger future economic growth.

Additionally, cryptocurrencies are in rally mode with Bitcoin jumping to a new all-time high this month.   Trump’s administration includes some very crypto-friendly people and has a focus on de-regulation.  I was reminded of come of the market froth that we saw in 2020 and 2021 when Elon Musk has been appointed to lead the “Department of Government Efficiency” (DOGE), which was seen a nod to the cryptocurrency, “Dogecoin”, fueling a massive rally in their price.

While markets are cheering higher growth potential for now, there is still a lot left to be seen as to how the new administrations potential policies play out, and what the true economic impact of those policies will be.  We remain overall positive on the stock market as the Fed continues to drop rates and employment (and thus the US consumer) remains strong. 

That said, we will be closely watching as new information becomes available and more clarity on the future of government spending and taxes on consumers may impact our overall GDP.

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Advisory services offered through National Wealth Management Group, LLC, a Registered Investment Adviser. This information is intended for educational purposes and is not intended as a recommendation to buy or sell securities. Investing involves risk. Before investing, you should consult with a financial advisor to determine how a specific investment strategy fits your personal goals and objectives.