Capitalist Investor

Post 2024 Election Analysis, Ep. 298

• Strategic Wealth Partners

Share episode

In the latest episode of The Capitalist Investor, hosts Tony, Luke, and Diamond Hands D delved into various topics ranging from the political landscape to market reactions and future economic prospects. Here are the five hottest topics from the episode:

1. Trump's Resounding Victory and its Implications

The episode kicked off with a deep dive into the seismic shift in the political landscape, following Donald Trump’s sweeping win in both the popular and electoral votes. The hosts discussed the Republicans retaking the Senate and the likely dominance in the House. Trump’s return to power, they noted, was seen as a catalyst for re-establishing his previous tax laws, averting a reversion to Obama-era legislation, and a broad reconfiguration of the GOP’s approach.

2. Market Surge: Analyzing the Post-Election Economic Rally

Luke provided an overview of the stock market's roaring response to the election results. He highlighted how the Dow Jones and S&P 500 saw significant gains, with small caps rallying by 5-6% and bond yields also climbing. The hosts interpreted this as a positive market reaction due to the anticipated regulatory and fiscal stability under a Republican-controlled government.

3. The Long Road to Economic Normalcy

A critical discussion ensued about the economic future under Republican leadership, especially concerning the removal of what Luke referred to as "sugar" – additional money in the system stemming from stimulus measures and government spending. They acknowledged that while necessary for long-term health, reducing these measures could pose short-term challenges and unpopular decisions, risking GOP blame if the market doesn’t continue to thrive.

4. Diverse Electorate and Shifting Demographics

Diamond Hands D brought into focus the notable diversity in Trump's electorate. They discussed how demographics are no longer a reliable predictor of voting patterns. Trump's success among Hispanic and African American voters was emphasized as evidence of a significant transformation within the Republican voter base. This shift arguably reflects a more inclusive GOP, potentially reshaping future campaigns and policy priorities.

5. Fed Policy and Economic Uncertainty

Tony shifted the conversation to the upcoming Federal Reserve meeting and its expected 25 basis point rate cut. The discussion tackled how this monetary policy might clash with other economic signals, such as a surging market and potential government spending cuts. The interplay between inflationary pressures, interest rates, and market responses was examined as a critical aspect to watch in the coming months.

Conclusion

The Capitalist Investor hosts provided robust analysis on the immediate and future impacts of Trump's return to presidency, the shift in the political landscape, and the market's optimistic reaction. As they pointed out, the real challenge lies in sustaining economic stability while making the necessary adjustments to re-establish organic growth. The evolving voter demographics also present a new dynamic for the next political cycle. Tune in next week to explore how these developments unfold and what they mean for investors and the economy at large.

Hello and welcome to this week's episode of the Capitalist Investor. As always, you have me, Diamond Hands D and the whole crew. Tony the Tiger, Cool Hand Luke. What's going on, guys? I can barely see out of my eyes. I didn't sleep all night. Yeah, I did not sleep much. I was probably up to like one watching and I'm just like, I think. There'S, I went to bed at one but like I woke up every hour just like cuz my brain was still like processing everything and like I had the TV on which I shouldn't have had and I just kept on looking at updates and stuff. I don't know, I mean, got home, ate, then sat down, started watching the results and I made it into Tequila Tuesday. Tequila. We had Taco Tuesday. So. Yeah, good. All right, good, good, good mix. All right, man. So Donald Trump won the popular vote, the electoral vote. This. We the Republicans retook the Senate and the only outstanding item right now is the House and it's looking for a red takeover and that would create the red wave. When's the last time, do you guys know off the top of your head, we had all control of Senate House? I think when Trump was in last. Time it was 16. Yeah. Because that's how we got into the Trump tax laws. And interesting enough, we were going to need him or not him, but the whole Republican Party to win again so that Trump can reestablish his tax laws again or keep them or modify them. Because if the Democrats would have win the House or would have won the Senate, we probably would have reverted back to the Obama tax laws. I don't think that is going to happen now. That's, you know, man, there's so many things happening in the market this morning. So there's a lot going on. So everyone's going to do kind of around the horn hot take on what you see, what you're thinking, where we're going. So Luke, we'll start with you. Well, let's just go with a quick overview. You have the Dow Jones ripping, a lot of equal rate weight S&P 500 stocks ripping like the bottom 493 ripping. You have small caps ripping like 5 or 6% this morning. We don't know where it's going to end. Right as of this morning, like this

is 9:

30am this podcast comes out the day after. So I don't know how it's going to end. But right now small caps are really hot. Bond yields are ripping higher. So bonds are selling off. There's a Couple takeaways from that that I'm sure we'll get into. But here's my quick analysis and something that I tweeted this morning. Look, a red wave is great to get the country back on track because we've been so used to sugar for the past four years given out with the trillions of dollars printed, stimulus packages, unemployment benefits, like there's been so much sugar given out that people are addicted to that sugar. Republicans, if they are true Republicans, are going to go in there and strip that sugar away. Elon Musk, we talked about, you know, the efficiency department in the government. If he gets in there, he's going to strip away a lot of that stuff, maybe even balance the budget, go from our $2 trillion in deficits spending back to even back to balance. If that happens, what people don't understand is that needs to happen to get back to organic good growth in the economy and organic growth in the, in the world. But that also means going through some pain. So what's going to happen? What I'm concerned about now is that since we got all three Senate, House and presidency, Republicans are going to get blamed for taking the sugar away because people are so used to that. So four years down the road, I'm kind of concerned to see, you know, what happens, because if we do take the sugar away, you know, I, maybe the markets aren't ripping as higher, aren't producing 15% returns like we've been used to. So when you say, when you say sugar, what you were just give the listeners just an idea of like one or two things that you're. Yeah, so like the, what's it called, the Inflation Reduction act, which was supposed to be reduced the inflation, which did the exact opposite. Like I think was like a 500, $600 billion package that got passed like Democrats are. We're pushing all this trillions of dollars of spending, basically flooding the whole economy with all this money that inflates the whole economy, right? When, when you get more money in the economy, when there's more money in the economy, that usually flows to corporations, it produces better earnings, produces better profitability. People feel like they can spend more because they have more money coming in some way or another, whether it's through their wages or through maybe an unemployment benefit, whatever it be. So if you take all of that away, people get angry and people are like, where's my money? People are like, oh, well, I've been used to all this different picking the winners and losers for the past four years that the government's been given out and I've been receiving some sort of benefit from that. They're gonna get angry. So I just hope that Republicans don't get blamed for actually getting the country back on track and not going down this debt spending of $36 trillion up to $50 trillion in the next couple years. What do you got? D? Yep. So, you know, I think, you know, I think, I think the high level takeaways are really apparent when you, when you look at the complete transformation of the Republican Party. I thought that was pretty apparent, you know, and I was flipping back and forth to all the coverage. I was like on like three, two stations for sure. But trying to mix in a third was a little tough. Yeah. So, but Dana. Oh, no, that's from cnn. The very excellent lady on the FOX coverage with the blonde hair. She was sitting to the left. She just made just great point after great point. But I think as far as the election goes, and she said this, and I'll look up her name here, basically, you know, she said the Democrats are counting on demographics. Right. You know, if you're Latino, you're supposed to vote this way. Right. If you're African American, you're supposed to vote this way. But after those groups come into America and there's a generation that has happened, they no longer are, you know, need to be cornered into this, you know, demographic group. They're just Americans now. And, and I think you saw that. I thought, I thought you saw, you know, Trump outperform with Hispanics and he. Did he double, he doubled down on like the, the male, the young male vote and particularly like the, you know, the black male. Yep, absolutely. Yep. So, you know, it's, it cannot be questioned that the electorate that voted for Donald Trump is probably the most diverse group that we've ever seen, especially from the Republican Party. I also thought living In Ohio, the 2000 election always sticks out in my mind with Florida and the hanging chad. But Florida and Ohio used to be, you know, like the super important swing states. And he won Ohio by 12 or 13 points. And Florida, you know, just ran up the score 50, 56 to 43, you know, 13 points. You know, that, that is astounding. You know, so it was, I think, as far as unifying the country, you know, I think there are no riots. Yeah. I mean, I don't know. I mean, I don't know what would spark one at this point. Yeah, it's impossible to argue with these results, I think, is what, you know, and even flipping back and forth to the different coverages you know, I think cnn, I don't know if embraced is the right word, but made peace with that pretty early on, you know, because they have to. Yeah. If like 60% of America thinks that way, I mean they're, they have to adapt. Yep, absolutely. So, you know, from, from that perspective, I thought it was good. But what Luke said, you know, is what I'm thinking about too because you know, we've, we've been talking about it for the last four years, you know. And what would that be? The. You, the economy is currently propped up. Yeah. You know, and it's going, it's not going to be a fun process to unprop it. It is not going to be. Yeah. With cost cutting, which Elon is supposed to do, will come pain. Yeah, there will be pain. But it's in our best interest, right? Yeah, absolutely. Yeah, absolutely. The, you know, I think the economy was obviously one of the biggest issues for voters out there. And it's very evident that while, you know, the economy is being propped up by, you know, government jobs and things like that is also causing mass inflation. And I think the people have finally realized that. And in order to stop that, we have to get our spending under control. It has to happen. Yeah. So I mean obviously like the market's ripping. DJ the Donald Trump, it's up 30% today. It's like all time high. Well, but you also have bitcoin near all time highs. Luke, you put, you mentioned it. Small mid caps are ripping 5,6% this morning. Financials are ripping because with a Trump, you know, a Trump victory comes low regulation with the banks. But there is one slight thing out there is that the Fed actually meets tomorrow. Yeah. This is, no one's really talked about this one because we've had that big elephant in the room of the election. But the Fed is expected to cut 25 basis points. I don't know how the, the market's going to react to that. I don't think it's going to be too positive because again, with cutting rates comes the illusion that things are broken. But honestly, at the end of the day I still feel that the Fed overshot. They're, you know, they're, they're hiking. So like just to taper it down 1 1%. You know, they've done, they came out, did 50 bips. Now they're going to come out and do 25. I mean if they even did another quarter. I still think it's in the realm of just normalcy. I mean it's okay to overshoot Green energy is getting crushed. But you know, on cnn, a CNN contributor, Scott Jennings, really nailed it last night. He said that this was eventually the Trump won because it was the revenge of the working class America. They're, they're just when, when you squash the middle class with inflation and you don't get the wage inflation to come with it, everything's a lot more difficult. Then that's a problem. Right? So with this red wave, you're going to have, you know, Elon coming in. You're going to get rid of some of this, this four years of nonsense that has been happening outside of the markets and more of just the woke stuff. It's gone. Hopefully, you know, like, it's gonna be tampered down and thank God, right, Because it's, it's, it's, it's, that's just not what it's not. It's not my view, it's not my vision. And then you get, maybe there'll be cuts in foreign aid. Maybe some of these words will stop. You know, I think Trump said, he goes, when I win, this war in Russia is going to be over. Yeah, it could be over by Christmas. Like, like before even gets, you know, in the White House. And then taxes, taxes are going to stay very similar. This is why the market is ripping today, because there is now foresight on what is going to happen into the future. We know a lot of things are not going to change in the, in the form of, you know, what the banks are going to be, you know, not as regulated, but taxes, capital gains. There's not going to be the unrealized capital gains tax. We can. Planning can start today with all of these companies on the next four years, the vision is it can now become clear. I think that's why the market's ripping today. One of the things I love about working with people that share similar values is waking up to this morning. Like, as we're doing this podcast, I've gotten an additional two more texts from clients probably that are listening to this one says america F. Yeah. Next one. Someone said, I think most people want opportunity, not handouts in this. And we learned that today. That's awesome. You know, I had someone else say, are you celebrating? I didn't sleep at all last night. I couldn't be happier. And I said, me either. I didn't sleep at all either. You know what? Like, I've got a couple client texts too that like, especially ones that like, live out of state. Like they were watching the Bernie Moreno and Sherrod Brown there Was. I heard them like, okay, I live in Crocker park in Westlake. I heard fireworks going off right down the street. They must have been right by me because it was Westlake, Ohio. Must have been right next to me. I almost, like, went outside and tried to join the party myself. Is that where he was doing his speech? Yeah, right down the street from me. Okay. I don't know exactly where, you know, the funny. Even my brother's coming in from Georgia. He even said he's like, yeah, even, sure. Like, even Bernie Moreno. I'm like, you know why? You know why everyone knows about him? Because they spent $500 million to get him his seat. Yep. I don't know what he actually brings to the table other than a Republican view, but there is a lot of money thrown at that seat alone. Yeah. I am actually surprised. I am surprised, actually, Marino won, though, because Sherrod Brown, like, just ran with the whole abortion thing. Like, you know that Marino is a. Popular candidate in Ohio. Yeah. And I did not think he was gonna win because of the abortion thing in Ohio, but apparently he did. Yeah. My kids. My kids have gotten into YouTube, which is just horrible. Just the weird stuff that's on YouTube that they just love watching. We're still into the kids YouTube. We haven't gone into the adult YouTube. So they get the, you know, they get the remote and they just. They just do it on their own now. It's crazy. But, yeah, like, I don't like them watching that stuff. But at the same time, every single ad after every single video that they watch was a political ad. And. Yeah, and it was, you know, all, you know, adult content. You know, not adult content, but adult. It was all about abortions, about, you know, men and women's sports. You know, my four year old was. Running around saying, go Trump. Like in she, we, she, quote, unquote, voted yesterday. So I gave her a big high five and I'm like, trump won last night, baby. I'm just glad I posted a video on Facebook and Instagram. As I was driving home, someone was waving an American flag on a bridge as we were all driving home. And I posted the video of him and I put a song on there, like, you know, red Kingdom. I was either gonna look, like, so dumb this morning if they. There wasn't a red wave, but I looked pretty smart this morning posting that. Like, you know, I kind of felt like it was coming you. I wasn't. I wasn't. I was watching the betting odds last night through Bovada constantly on where things were moving and I, you know, like, I was actually surprised when I got to that part with what, you know, how the, the president, the presidency, the Senate and the House all looked. And like somewhere around 8 o'clock it flipped from like it went super positive that there was going to be a red wave. So, yeah, I know, you text us, you're texting us and all the updates. I love it. I'm going to definitely pull out this Trump charcuterie board for Thanksgiving. For Thanksgiving. I'm not going to be very liked by a couple of people in my family, but it's so cool looking. Here's my question. Do you guys think this is going to last, this market rally? Oh, that's awesome. Please. The Trump charcuterie board, the cheese, the. Cheddar cheese makes up his hair. I love it. Do you guys think this rally is going to last or is this kind of like just some excitement? Would you buy into this rally or what would you buy into? I wouldn't, I wouldn't like, say, man, that's a good question. It's ripping so hard right now and it's ripped going into. Well, I guess it was kind of flat going into the election the last two weeks. But yeah, I mean today's pop is, I mean, I imagine tomorrow you'd see a pullback. God, that's a good question, man. Yeah, I are. Well, I think the key research, our research. So I'm just going to lean on our research because how I feel is probably wrong. But our research is telling us that we should probably, we should probably feel that or we should probably expect the Same returns in 25 as we did in 24. Maybe not 20% or something, but a positive year because there's still so much money in the system that because of all these bills that have been passed, they're not going away. They can't be just squashed tomorrow. There will be more money next year. I think now it's going to come down to, you know, I mean, it's a slow moving environment. Right. You can't just become president first day and then start moving mountains. So he's got to get into office first. Yeah, yeah. Two months. Yeah. I think, you know, the, we talk about, you know, the market liking certainty obviously versus uncertainty. And I think that's what you're seeing today. The vision is clear with a, you know, Republican controlled House and Senate and a president that is not, he's not scared of anything. Right. He's already been president for four years. He's already made the mistakes, especially with the people that he put around him. You know, the team of people around him is, frankly, fan. Is fantastic. You know, they're all amazing. You know, you saw, like, people like Dana White there last night. Like, everyone's saying they're the Avengers. That's a good way to. Of. I mean, you know, Elon Musk has to be given a ton of credit for where we are right now by purchasing Twitter. Like, that's an Avengers move right there. It's kind of nice that, like, the. The age of all this. I mean, I know Kennedy is older. He looks great. But he's like 75 years old or something. Like, he's. But he looks fantastic because he's a fitness guy. Like, he's eats well. He. He knows about all the BS that the FDA puts in our food. You know, like, I mean, I'm looking forward to that change. Like, we might actually have a skinnier America because we just have better quality food. Yeah, maybe I don't want to be skinny. Well, I don't need seed oils in every single product out there. Right. You know, it's. But I mean, Elon Jung, Vivek's young. Vance is young. Like, all of these people around him are young. And it's attractive. It should. It should be attractive. Yep. You know, they're, They're. Everyone around him is really not a career politician. Right. So it's got to be a. That makes me feel good. So that. That was. That was really the allure of Donald Trump, you know, back in 2015 when. When all this started. Right. He wasn't a politician. We've seen over the last eight or nine years how politicians work. Right. And it doesn't seem to always be for. For the American people. So. So, yeah, I think that's why the market is ripping, because I think the vision on what's going to happen here is extremely clear. I mean, I wouldn't rule out a pullback between now and the end. Oh, yeah. You know, I mean, but you also got the Santa Claus rally coming up. You know, like, there's a lot of. Things that I'm actually surprised rates are rising so much. There's two takes there that tariffs are going to be inflationary. That's one take. The second take is that Trump's going to power the economy and growth is going to fuel inflation, but good inflation, real wages, essentially. But again, going back to my point of if you start to take sugar away, that's actually deflationary, too. So, again, it's very interesting, I think we, we have a lot of. You talk about volatility, I think just because there's so many things that need to be taken care of, even though there is certainty, that should make maybe less volatility, maybe in the short term because of a certainty. I think as we go through this process of fixing things, you're going to see some whipsaw back and forth in certain asset classes, certain bonds. You know, you're going to see a lot of movement very quickly each direction as, as we go through this unwinding process. Yeah, some. I heard somebody say that like last year or the last time Trump won, he put all the tariffs on steel and aluminum as soon as he got in. And then, you know, the preceding year, steel and aluminum companies in the United States went down when the market was flat. The market, those, those sectors were down like 20%. And I don't know, man, I just. Feel you should just do what the French guy did and put like $50 million in Trump to win. You could have paid your whole entire rest of your salary the rest of your life, I guess I gotta say, he won $47 million. That's the most everyone has ever won on an election betting. Wow. So pretty crazy. Impressive. All right. I wasn't that confident. No, I mean, I just think that, you know, like, I think the, it's gonna help the market move forward. Can there be pullbacks? I mean, I think that should be expected, you know, once the, the height of, you know, the euphoria of what happened is over. Yeah, I think. But there's a lot of things that, you know, we talked about geopolitics too, like what's going to happen now? So, like, there's a lot of just, there's certainty, but now there's uncertainty because certainty creates uncertainty. If that makes sense in some sort of fashion. Yeah, well. Oh, that's what I meant to say, though. Like, maybe this is the vision again of a soft landing because we've never really had one of, hey, tariffs are deflationary. Right. But cutting rates are inflationary. Like, again, this pool, this, this, you. Know, just to clarify, tariffs are technically inflationary. But I'm sorry, I'm sorry, just to. Clarify for the years, I don't, I. Mean, but if you're right there, you. Have inflation cutting, you have. Terrorists are inflationary, you have growth that's inflationary, but good inflation, because it's real wages growth. But then the key third thing is there offsets. It is correct. Cut back in government. Government, correct. So that will offset things. Yeah, that's where I was trying to go. But soft landing, a hundred percent it. Again, it looks like how does this all piece together? And again, it could just be what a soft, a soft landing really looks like. So. Well, I am going to go to sleep early tonight because I didn't get much sleep last night. So I will get well rested because I can. Like I said, I can barely see right now because I did not get any sleep. I'm caffeinated too, which, you know, you know, the combination, the combination of being caffeinated and sleepy is a bad combination. It is not a good, it's not a good place to be. Yeah. All right, man. Take us home. All right, well, thanks for listening this week. Obviously, lots to discuss going forward with this news and we will. So if you have any questions, comments, show ideas, hit us up@infowpconnect.com and we'll talk to you next week. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.