Trump Presidency and Market Outlook: What Investors Should Know
Former President Donald Trump has won the U.S. presidency, with Republicans retaking control of the Senate. The House of Representatives remains undecided, with Republicans holding a narrow majority. Congressional control is crucial for a second Trump administration to implement its tax, energy, trade, and regulatory agenda. Following the election, U.S. equities reached record highs, the U.S. dollar strengthened, and bond yields increased.
At Pereon Wealth, we focus on helping clients navigate market changes, providing strategies to protect and grow wealth during periods of political and economic uncertainty.
Fiscal Policy, Tax Cuts, and the Budget Deficit
A Trump administration may pursue corporate and individual tax cuts while expanding budget deficits. Persistent government spending could keep long-term Treasury yields elevated, as investors demand higher returns for issuers with ongoing fiscal deficits.
For investors, our strategy recommends remaining overweight in U.S. equities in the short term, supported by solid economic growth and corporate earnings. Meanwhile, trimming profits and rotating into high-quality fixed income can help manage risk.
Learn more about What We Offer and how our approach integrates market and political analysis.
Trade, Deregulation, and Energy
Trump’s administration is expected to focus on trade tariffs, deregulation, and energy production. Potential tariffs on China and universal tariffs may reinforce global economic fragmentation, contributing to medium-term inflation pressures.
Deregulation efforts could benefit sectors such as energy, financials, and emerging industries like digital assets. While full repeal of certain climate policies seems unlikely, reforms could expand infrastructure and energy production.
Discover more about How We Work and our process for evaluating sector-specific opportunities.
Interest Rates, Inflation, and Investment Strategy
Yesterday, the Federal Reserve lowered interest rates by 25 basis points, with Chairman Powell emphasizing independence from political influence. Despite near-term market optimism, multiple factors—including supply constraints, an aging workforce, and stricter immigration policies—may keep inflation elevated.
Given these conditions, we currently maintain a neutral stance on long-term U.S. Treasuries, favoring medium-term maturities and high-quality, asset-backed fixed income. Corporate earnings remain a key driver of stock performance, making it essential to rotate profits and manage portfolio risk carefully.
For a deeper understanding, read About Pereon Wealth and our philosophy on aligning investment strategy with economic fundamentals.
Key Takeaways for Investors
Political cycles vs. economic cycles: Economic fundamentals will ultimately dictate market direction, with cycles proving more influential than politics.
Sector opportunities: Energy, financials, and digital assets may see near-term gains from deregulation.
Portfolio strategy: Continue overweighting U.S. equities while gradually rotating profits into high-quality fixed income.
At Pereon Wealth, our goal is to provide clarity in uncertain times and help clients make informed investment decisions aligned with long-term objectives.
