Donald Trump’s inauguration speech held no surprises. The script was leaked, guessed, and thoroughly underwhelming.
Markets shrugged. And those tariff threats — 25% on Canada and Mexico by 1 February? Maybe? Please. That storyline’s already collecting dust.
Traders have turned their focus back to the basics: the Fed and earnings season.
All priced in
As Strategas Research put it: markets price in the election long before the president takes the oath. Their 2016 Trump and 2020 Biden portfolios lost steam the moment inaugural confetti hit the ground.
Here’s a silver lining tho: the fundamentals are flashing green. Last week, Fed Governor Christopher Waller’s dovish remarks pushed bond yields down, spurring investors to lock in returns before rate cuts.
Lower yields = stocks look more attractive.
Meanwhile, earnings are crushing it. Big banks are blowing past expectations, and analysts are upping S&P 500 growth estimates, with some, like Yardeni Research, predicting a fiery 12% climb.
“We had thought it would be a strong earnings reporting season. Now we think it will be even stronger,” Ed Yardeni, president of Yardeni Research, said.
Strong earnings = strong market.
Read more: Looking to Trump-proof your portfolio? Here’s the cheat sheet
The playbook
Financials are flexing hard, with fourth-quarter growth projected at 47.5%, per FactSet. This is the highest among all sectors, even tech’s 13.9%.
Major US banks are thriving, and Trump’s potential deregulation push could fuel more gains. The Financial Select Sector SPDR Fund ($XLF) is already up 32% over the past year, topping the S&P 500’s 24% gain.
Another sleeper hit is the iShares 20+ Year Treasury Bond ETF ($TLT). With bond yields dropping, $TLT is poised for gains. Yields and bond prices are inversely related, so bond yields ⬇️ means bond gains ⬆️.
Read more: Trump 2.0: What’s in it for Indian stocks?
Fun fact: $TLT was a Trump-era MVP, climbing 25% between 2017 and 2021.
So… yeah… forget the speech. Tune into the real deal.
Edited by Ankush Chibber. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
