Hi, I’m Darnell Simon here at Wiser Wall Street, and today I’ll cover Liz Ann Sonders and Kathy Jones’s analysis of the 2024 election’s market impact. Let’s jump right in.

Election Results and Market Response

Kathy notes the election results, especially for president and Senate, arrived sooner than expected. This quick announcement has energized financial markets. Meanwhile, Liz Ann points out the stock market’s robust reaction. She attributes this to anticipated policies, such as lower business taxes and relaxed regulations, which typically boost growth. However, the market’s response is complex. It also reflects concerns about trade policies and inflation.

Equity Market Trends

The U.S. dollar has risen in value, but this could hurt earnings for U.S. companies selling abroad. Still, the stock market is up. However, Liz Ann warns that it can be unpredictable. Markets often reverse gains or losses quickly. She plans to watch the market closely today to see how it develops.

Federal Reserve and Bond Market Movements

The Federal Reserve is likely to cut interest rates by 0.25% soon. Kathy notes that the bond market is reacting to expected government spending and tax cuts, which could boost the economy. However, these policies might also cause inflation, affecting bond investors. If inflation rises, the Fed may slow down on cutting rates. Still, she mentions that current inflation seems stable, supporting the rate cut decision.

Challenges for the Fed and Future Rate Cuts

Kathy highlights the challenges the Fed faces. The strong dollar has been helping to keep inflation low since it makes imports cheaper. She also mentions that agricultural and oil prices have dropped, partly due to tariffs. Although this trend lowers inflation, the Fed is still considering possible rate cuts due to uncertain future economic conditions. Kathy believes the Fed will make an interest rate cut in the upcoming meeting, but future cuts will depend on new economic data.

Market Reactions and Cautionary Advice

Liz Ann warns investors to be careful after elections. They might have unrealistic hopes for sectors like energy and technology. History shows these hopes often fail. For instance, after Trump’s win, a boom in energy was expected. But the sector stayed flat. Yet, under Biden, traditional energy stocks bounced back. This shows the market is unpredictable. So, it’s risky to base long-term investments only on election results. Investors should focus on market fundamentals, not just politics. A president’s policies can have unexpected effects. Many factors, like global events, rules, and technology, influence sector performance. A careful approach helps avoid mistakes and builds better portfolios.

Approach to Bond Investments

Kathy advocates a careful strategy in bond investing. Despite rising interest rates, she advises sticking to the market average. Avoid drastic changes after the election. Major policy shifts could increase volatility. Thus, it’s crucial to be cautious and not react hastily to short-term events.

Predicting 2025 Market Trends

For 2025, Liz Ann sees shifts between sectors like technology and materials. She suggests investing in companies with strong finances and cash flow, rather than targeting specific sectors. These companies offer more stability. Additionally, she believes trade policies, beyond the election, will impact sector shifts.

Impact of the Strong Dollar on Global Markets

Kathy points out the problems debt-laden emerging-market countries face due to the rising dollar. When the dollar gets stronger, these countries find it harder to pay back debts in their local currencies. This, in turn, strains their fragile economies. Take Turkey in 2015: its Lira dropped in value sharply as the dollar surged. This made it tough for Turkey to handle its dollar debts. Currently, the same issue is hitting the Mexican peso and others. It’s likely to cause global market shifts. A similar situation happened in the 1990s in Asia. There, a stronger dollar triggered a currency crisis, spreading across the region and needing international help. When the dollar rises it puts more pressure on emerging-market currencies. This could lead to a rocky time for global markets.

Economic Indicators to Watch

As the podcast concludes, Liz Ann discusses important economic indicators to watch in November, such as data from the National Federation of Independent Businesses on small business confidence, along with inflation and retail sales reports. These reports will provide insights into consumer spending and help gauge the Fed’s next moves.

I’ve included a link to the entire podcast in description below.

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