As Trump Announces 'Golden Age for America,' Market Adjusts to a New Reality
There is great economic optimism, but there is also likely to be elevated volatility.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
In his inaugural address, President Trump stated that the "golden age of America begins right now." That sentiment appears to be being embraced by the market as well. Famed investor Stanley Druckenmiller said on Monday, "I've been doing this for 49 years, and we're probably going from the most anti-business administration to the opposite. We do a lot of talking to CEOs and companies on the ground. And I'd say CEOs are somewhere between relieved and giddy. So we're a believer in animal spirits."
There is great economic optimism out there, but the big issue is how it will impact the market in the short term. Equities have started mildly positive, with the S&P 500 SPY indicated about 0.5% higher and all the Magnificent Seven MAGS names trading in the green. However, there is some sell-the-news action in Bitcoin IBIT and the new TRUMP ($TRUMP) meme coin.
One major positive is that bonds are stronger and interest rates lower, as some of the concerns about tariffs have eased. Trump has signaled that they are still studying how tariffs will be put into effect, but there does not appear to be any plans for broad tariffs across the board.
Trump has already issued dozens of executive orders that will impact the energy sector, AI, corporate governance, and federal employment. The market will take a while to assess the impact of these policies, but the mood is hopeful and upbeat.
In addition to a barrage of Trump policies and political news, the meat of the fourth-quarter earnings season will start this week. It will be particularly interesting to hear how management sees Trump's impact on their operations. The mood going into these reports is not overly exuberant, which is a positive.
Given the high level of optimism, there is the risk of some profit-taking into strength, but there is also likely to be elevated volatility as market players adjust to the new reality. I expect to see an increased focus on individual stock picking as investors try to determine which stocks will perform best in a dominated world. I'll be particularly focused on small-caps to see if they can start a positive trend.
At the time of publication, Rev Shark had no positions in any securities mentioned.
