The markets continue to remain euphoric weeks after the US elections. Donald Trump is playing to the tune of the retail investors and they are loving it! It is also good to see Trump put priority on the US debt crisis issue and I hope he will be successful in reducing government waste while boosting the economy. This would be the best case scenario for the long term.
In the short term however, I expect the reality to hit hard in Q1 of 2025 with the earnings reports failing to meet high expectations and failing to justify the high valuations.
While it looks like Trump will be good for businesses and investors, and he will have little resistance to push through with his plans, he might not be able to keep everyone impressed. I’ve explained before how reducing budget deficit is painful. You can either cut spending or raise taxes, both of which have a deflationary impact on the economy.
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