Post Election Stock Outlook

November 6, 2024

By Robert Wiedemer

As I guessed, undecided voters were more likely to vote for Trump than pollsters had expected. That gave Trump the votes he needed to carry the electoral votes in all the three key swing states -- Wisconsin, Michigan and Pennsylvania – and win the election.

And, as I expected, the market reacted well to a Trump victory with a 2% jump overnight. I think the market strength will continue well into next year and the market will do better than it would if Harris had won.

With the expected flip of the Senate seat previously held by Democrat Joe Manchin in West Virginia to Republican Jim Justice, the Senate would become Republican if Trump won. So, with Trump’s victory it has become Republican and will likely pick up even more Republican seats in Montana, Wisconsin and Ohio and quite possibly a couple other states.

Interestingly, the fate of the House is still outstanding, and the outcome won’t be known for many days. However, the Democrats have flipped one the four seats they need to win the House. If the House goes Democratic, we will have a divided Congress which may cause problems for some of Trump’s legislative efforts.

But it may not cause tax cuts to be defeated. Donald Trump has called for elimination of taxes on tips and Social Security income. Those tax cuts could be combined with another corporate tax cut, which would be good for the stock market, and attract the few Democratic votes it needs for passage.

I would also expect the previous tax cuts that come up for renewal shortly will be reinstated – again, I think they are likely to attract enough Democratic votes for passage.

Finally, despite predictions from our most prominent banker, Jamie Dimon, President of JP Morgan Chase, that we are headed for civil war, I am not predicting civil war. What I think we are headed for is an exceptionally strong stock market over the next year. As I said back in June, I think it will be similar to the year after Donald Trump won in 2016.