Our neighbours to the south have decisively chosen Donald Trump as their next president. Regardless of how you feel about the result, the fact that it is a clear decision is good on a number of fronts.
From the market perspective, we expected it to go up regardless of who won, but this clear answer has added a little fuel to the fire.
So what now?
We remain somewhat cautious in our optimism. There are storm clouds on the horizon: Tariff's, markets are "high", massive US debt and inflationary pressures returning to name a few. But on the other side an administration that wants to cut taxes and support businesses are positive for the stock market.
There has been a push in what appear to be "trump friendly" stocks early on, but it's too early to tell if that will pan out. The industries that Trump was likely to be beneficial for like energy and financials, were two of the worst performing sectors during his last term in office. So we would shy away from any speculation like that now.
Trump has been clear about a protectionist approach to the US economy. With respect to tariffs that have been threatened on all imports, this is a big concern for us as Canadians, where 80% of exports go the US. I think though there are two main points to consider.
1. For all intents and purposes, all economists agree that tariffs don't work for anyone. It hurts the company/country they are levied against, and it raises prices for the consumer who purchases the product domestically.
2. Lets wait and see what actually happens. There will in all likelihood be negotiations as the USMCA (NAFTA part 2) 's sunset clause kicks in July 2026. Canada and Mexico will elect to continue, the US will scrap it and negotiations will begin.
Canada is also better prepared now.
I've included an article our Portfolio Advisory Group published, which I feel does a good job explaining our views on the economy and market moving forward under the new administration, and I'd encourage you to review it.