Dear valued client,
Markets rose to all-time highs this week following
Fed Chair Jerome Powell’s announcement of a one-quarter-point interest rate cut, bringing short-term interest rates to 4.50%-4.75%. This follows a more significant 50-basis-point reduction in September, as Powell aims to curb inflation while sustaining economic stability. If economic data supports continued stability, investors and economists anticipate further incremental cuts, potentially bringing rates to the mid-3% range by 2026.
The re-election of Donald Trump has triggered a significant market shift, sparking gains across various sectors as investors anticipate policies focused on deregulation, lower corporate taxes, and increased mergers and acquisitions. Major beneficiaries include the financial and energy sectors, with JPMorgan Chase and Wells Fargo jumping 11.54% and 13.11%, respectively on Wednesday, and Exxon Mobil rising 1.71%. High-growth tech and media stocks, such as Trump Media & Technology Group and Tesla, also saw notable increases of 5.94% and 14.75%, respectively. Bitcoin hit new all-time highs in the crypto space, while Coinbase surged 31.11%, driven by expectations of a more favorable regulatory environment. However, Trump’s policies have weighed heavily on clean energy stocks, with the Invesco Solar ETF plunging 10.77% as investors expect an end to renewable energy subsidies. The bond market reacted with rising yields, pricing in potential higher inflation from tariffs and increased deficit spending. While optimism is evident, investor caution remains; prominent figures like Leon Cooperman warn that the market could overestimate the benefits of Trump’s policies.
World leaders offered varied responses to Donald Trump’s election win; Israeli Prime Minister Benjamin Netanyahu and UK Prime Minister Keir Starmer quickly congratulated Trump, with Netanyahu calling his victory “history’s greatest comeback.” However, Kremlin spokesperson Dmitry Peskov stated that Russian President Vladimir Putin would not congratulate Trump, labeling the U.S. an “unfriendly country.” President Joe Biden extended a formal congratulatory message and invited Trump to the White House. Canadian Prime Minister Justin Trudeau also congratulated Trump but expressed concerns about potential economic challenges, as Canada could face trade tensions, tariffs, and reduced business investment under Trump’s administration. Quebec leaders, including Premier François Legault, raised additional concerns about possible migration issues, with Trump’s renewed pledge for deportations potentially leading to an increase in U.S. migrants crossing into Canada. These reactions reflect the international community’s mixed outlook on the return of a Trump administration.
This election season marks the most expensive in U.S. history, with an estimated $15.9 billion spent on presidential and congressional campaigns, surpassing the $15.1 billion raised in 2020 and $6.5 billion in 2016, according to OpenSecrets. The unprecedented spending was fueled by over 11,000 PACs and political groups, with nearly two-thirds of donations originating from just 100 influential groups funded by billionaires. Notably, 400 Americans donated at least $1 million each—a dramatic increase from the 23 million-dollar donors in 2004. Vice President Kamala Harris’s campaign raised $1.6 billion, bolstered by prominent supporters like Michael Bloomberg and Bill Gates, while Donald Trump’s campaign amassed $1.1 billion, with major contributions from Elon Musk and Timothy Mellon, the latter being the top individual donor of this cycle. In stark contrast, Canada’s 2021 federal election cost only $69 million, highlighting the outsized influence of money in U.S. elections—a sentiment echoed by 80% of Americans who believe that financial power wields too much sway in the political process.
“History never repeats itself, but it does often rhyme.” – Mark Twain
Have a terrific weekend,
PW
