The vibe on Wall Street after Donald Trump’s re-election: let the good times come.
“This election was about whether you were more afraid of four years of the same or more afraid of four years of change,” Apollo Global (APO) co-founder and CEO Marc Rowan said at Yahoo Finance’s Invest conference. , adding that “the market verdict has been issued.”
Rowan added: “I think this administration has a great opportunity to really turn the country around to take advantage of all the inherent positives that we have.”
Rowan’s optimism matches that of the market, with the S&P 500 surpassing 6,000 points in the best post-election collapse of all time. The rally is based in part on Trump’s policy proposals on making tax cuts permanent and loosening regulations, experts say.
But that rebound and optimism may be ignoring a hurdle caused by tariffs.
The top 100 companies in the S&P 500 by market capitalization earn an average of 8% of their revenue from China. If Trump’s proposed 60% tariff on Chinese imports comes to fruition, profit margins and stock prices could fall, although tariffs are more likely to double from current levels, according to Bloomberg Economics. .
It’s a concern echoed by Deutsche Bank’s chief US economist, Matthew Luzzetti, on Yahoo Finance’s Opening Bid podcast (listen below).
“Markets are saying that more or less Donald Trump means something good for growth, something inflationary,” Karen Karniol-Tambour, co-chief investment officer at Bridgewater Associates, said in Invest, warning that immigration restrictions and a rising deficit They are inflationary.
To understand when the deficit demon behind you becomes a zombie in front of you, BlackRock’s Rick Rieder looks at foreign demand at Treasury auctions. Despite these risks and the stock’s high multiples, he remains bullish.
“The technicals of stocks are crazy…unbelievably good…I have learned throughout my career that the technicals win. You know, even if you believe in fundamentals, the technicals win more,” Rieder said in Invest.
A Federal Reserve easing cycle that the market believes could land the United States on a soft landing doesn’t hurt either. Although Judy Shelton, a former economic adviser and Trump appointee to the Federal Reserve, didn’t want to give the Fed a victory party anytime soon.
“We’ve been through the worst inflation in 40 years and when it comes to accountability… I don’t think anyone has been fired from the Fed,” Shelton said at the conference, who also questioned the Fed’s role going forward. .
“I think this is an interesting time when people are looking at the appropriate role of the Federal Reserve… and maybe reconsidering if we want… the interest rate… the price of capital; Do we want it to be established by a dozen people who vote for eight people? times a year?” Shelton said, adding that he is also optimistic about Trump’s upcoming presidency.
