Donald Trump has been re-elected as president of the United States for the 2025-2029 term. The immediate outlook following his victory was positive; however, caution is advised in the long term, as the measures he takes could pose risks to the economy.
Possible Economic Impact:
- Fiscal Policy: while the proposed tax cuts and reduced regulation may benefit businesses, they could also increase the budget deficit.
- Tariffs on goods imported to the United States, particularly from China: This could lead to inflationary pressures, slowing down the Federal Reserve's interest rate cuts, strengthening the dollar, and weakening other currencies.
- Immigration Policy: Mass deportation of illegal immigrants. Given the current low unemployment rate, wages could initially rise to replace the deported workers, while slower population growth could reduce consumption and affect the labor market.
- Energy Policies: The proposals aim to increase fossil fuel production and reduce incentives for renewable energy. This could lower natural gas and oil prices in the short term; however, they will also remain subject to external factors.
Reaction in the Capital Markets
The major stock indices (S&P 500, Dow Jones, and NASDAQ) reached historic highs, driven by expectations of tax cuts and reduced regulation.
Tesla's stock surged, likely as a result of the close relationship between Trump and Musk, who provided key support during the election campaign. The tariffs Trump plans to impose on Chinese electric vehicles could further strengthen Tesla's position in the market.
Bitcoin reached a new record, driven by Trump’s promises, which included the creation of a favorable regulatory framework for cryptocurrencies and the establishment of a strategic Bitcoin reserve.
The dollar also strengthened, reaching its highest level in the past year. Similarly, the yields on 10-year Treasury bonds increased due to the risk of higher inflation caused by the proposed tax cuts and tariffs.
At Numa, we actively monitor the market to identify potential investment opportunities for the benefit of our clients.
