The financial markets embraced a Trump victory, sending stock prices to higher levels following a nine day consecutive decline in anticipation of uncertain election results.
Market performance following presidential elections have varied over the decades, however, Trumpâ€™s effect on the S&P 500 Index of 1.11% was one of the best for both Democratic and Republican presidential victories ever. Obamaâ€™s win in 2008 saw the largest drop of -5.27%, while Reaganâ€™s victory in 1980 saw the largest gain of 1.77%.
U.S. Treasury yields rose dramatically with the expectation that a Trump presidency along with a Republican controlled Congress will inevitably ramp up government spending in order to boost economic growth. During the campaign, Trump was very critical of the Federal Reserve not acting to raise rates soon enough, insinuating political influence.
The Republican win in the Senate and House along with a Republican president means that legislation and laws will flow much more quickly through Congress, rather than running into stalemates as with a divided Congress. Trump and many republicans have been calling for a rollback of various laws and regulations put in place during the Obama administration. A focal regulatory act is the Dodd-Frank Act, put in place following the financial crisis of 2008/2009, creating immense regulatory costs for the banking sector.
Ratings agency Standard & Poor's affirmed the investment-grade 'AA+/A-1+' rating of U.S. government debt, a day after the presidential election, while maintaining its stable outlook. The agency stated that it will â€śassume the longstanding institutional strengths and robust checks and balances of the U.S. that will support policy execution in a Trump administration, despite the president-elect's lack of experience in public office, which raises uncertainty on policy proposals.â€ť
The following are expected to be affected by policies and regulations set into place by a Trump presidency and the Republican controlled House & Senate:
Fiduciary Rule - During the election Trump did present the idea of perhaps reversing the fiduciary standard that has just recently been implemented by the department of labor.
Tax cuts for individuals and corporations - Both Trump and the house Republicans have been pushing for tax reform plans that would lower individual and corporate tax rates. Trump has proposed reducing the corporate tax rate to 15% from the current 35%.
Health care reform including the possible dismantling of Obamacare - The modification if not dismantling of Obamacare was a key theme with Trumpâ€™s campaign.
Trade and exports - Foreign countries with trade agreements in place with the United States are concerned that Trumpâ€™s presidential victory might lead to an upheaval of existing trade and economic arrangements. The North American Free Trade Agreement (NAFTA) has been a primary target of Trumpâ€™s.
Infrastructure - A Trump presidency, as well as a Republican controlled Congress, has set the stage for increased government spending as well as increased spending on infrastructure starting in 2017.
Defense contractors - Historically, Republican leadership has usually been supportive of defense spending.
Coal industry - During his campaign, Trump voiced his support for the U.S. coal industry and Chinaâ€™s pursuit of the industry.
Oil and natural gas drillers - During the campaign, Trump reiterated his support for the oil and natural gas industry, perhaps curtailing various regulations inhibiting further growth and industry profitably.
Pharmaceuticals & Biotech - Hindered by Obamacare and recent regulations, Trump has proposed scaling back pricing regulations.
Banking Industry - Should Trump and the Republican controlled Congress decide to alleviate current regulations such as Dodd-Frank, the regulatory environment would become less inhibited for U.S. Banks to generate profits and loan money to consumers. A rising interest rate environment is always beneficial for banks.
(Sources: S&P, Moodyâ€™s, Reuters. Bloomberg)