Initially markets were negative to the Trump win with index futures down their maximum overnight 5% limit. Then recovering to up 2% by the end of normal trading hours.
Initially they assumed that a Trump presidency would augur a deflationary global downturn in a Smoot Hawley 2.0 package of trade barriers and tariffs or at least a blackhole of uncertainty. But after a few hours the markets decided the Trump presidency would be Reaganomics 2.0 with a surge in government spending and tighter money.
They think there will be shift from easy money to a focus on fiscal stimulus.
JP Morgan economist Michael Feroli thinks the fiscal program will boost GDP by 1.5% over two years while doubling the federal budget deficit. But import curbs could cripple US businesses dependent on global supply chains.
Global equities are up $1.3 trillion but global bonds are down $1 trillion.
Barrons also thinks the Gun rally (stocks of makers of guns) is over.
Arun Daniel thinks the biotech and drug companies have more increases. The good news is not baked into the stocks fully.
Winners and losers by sector
- Construction materials
- Independent Refiners