DearInvestor, Candidate Donald Trump is now President Elect Trump. On the news, the S&P 500 went up almost 5%. On the campaign trail, there was clearly a wide gap between a Donald Trump and Kamala Harris White House. With clarity, we spent the week @Hedgeye dissecting the implications for various pockets of financial markets – from sectors to asset classes. Before we get to that, here are your Weekend Reading quick links: So, back to the implications of Donald Trump winning the Presidential Election… "This is one of the great political comeback stories in American history," remarked Hedgeye Demography analyst Neil Howe this week. "People had really given up on Trump politically after 2020. He kind of disappeared and the Republican party wasn't sure what they were going to do. This is an amazing story how he came back so decisively. I think it's going to end up over 300 electoral college votes for Trump." This decisive victory, with a potential Republican sweep of Congress on the table as well, lays the groundwork for big change across America. "The market message post-election is very clear. The market is saying, 'Not only are we going to have growth, but inflation is going up," says Hedgeye CEO Keith McCullough in our "Election Aftermath" free webcast this week. Keith continued, "When the rate of change of Growth and Inflation is expected to go up, you get up bond yields, up dollars and up stocks. That's what we're positioned for and that's great." While political types hyperventilate, investors need to tame their emotions and do a cold assessment of the facts, Keith says. "This isn't about having a panic attack about the Election. It's about navigating #TheCycle, using rate of change math, not politics," Keith continues. "A racoon could've been elected and you'd have the same set-up: Higher inflation… And the only way that you the People can outrun inflation is to own it." So where are the pockets of the U.S. economy that stand to benefit from a changing of the political guard? You might just want to tune into "The Pitch" on Tuesday, November 12th at 11:00am ET. You'll be able to watch six Hedgeye analysts pitch one of their high-conviction stock ideas (Long or Short) to our Risk-Manager-In-Chief Keith McCullough. All analysts will come armed with stock-picks that stand to benefit from the evolving macro and political landscape. If you like making money, you're going to want to check this webcast out (it's FREE). But while you wait, here are some key takeaways from our analysts on "The Call @ Hedgeye" this week. (The Call @ Hedgeye is our morning research call with our entire 40+ analyst team discussing their favorite stock ideas and providing timely topical updates. With a subscription to The Call @ Hedgeye you can listen in too!) Here's some quick free money from our Financials and Digital Assets analyst Josh Steiner. "On the digital assets side, the outcome of this election is significant and important, certainly for Bitcoin, it's an obvious beneficiary here," Steiner said. "On the financial side, there's a lot here… For capital requirements for big and mid size banks, this is likely to produce a far less onerous outcome than if the election had gone the other way. So banks are going to be able to deploy a lot of that excess capital in the form of buybacks and dividend." The regulatory landscape might just be opening up as well for Big Business in America, says Legal analyst Paul Glenchur. "David Zaslav, the chief of Warner Bros. Discovery, was openly talking this week about the post-election environment for consolidation improving. That's stating the obvious, but even bolder deals that are a bit of a stretch might be contemplated." Paul provides an example of the type of landmark deals that could get done. "For example, there's been speculation in the past that Apple (AAPL) and Disney (DIS) could come together in some way, like perpetual licenses," Glenchur explains. "I suspect we'll have a lot of merger-arb discussions in the months ahead once we get a better sense about the heads of the FTC and the anti-trust division at the Justice Department." While our research team grappled with post-election day clarity, others struggled to adjust to the new reality. During the Federal Reserve's post-rate cut decision on Thursday, Chair Jerome Powell was asked, "If Trump asked you to resign, would you?" His response? An ice cold, no B.S., "No." Asked about the "legality" of President Elect Trump demoting or ousting Governors in leadership positions, Powell replied with just five words. "Not permitted under the law." The Powell Fed has had a series of gaffes, calling inflation "transitory" for almost two years as inflation went to 9%, Powell was also forced to embark on the most aggressive tightening cycle in decades to fix his inflation mess. Now, Powell is declaring victory after inflation has come down. Is Powell's "Mission Accomplished"? No. "Powell is unequivocally full of shit," says Hedgeye CEO Keith McCullough. According to polling inflation was the most important issue of the 2024 election. It's easy to understand why. In the past three years, cumulative inflation is up +22%. That's why the American people see Powell and say, "He is unequivocally full of shit," says Keith McCullough. "Powell has no credibility left," says Keith McCullough. And Powell should be more concerned. We're forecasting inflation heads higher from here – up above 3% in 2025. Wall Street sees inflation falling to the Fed's 2% target. If you're worried about inflation hurting your portfolio, there's a great way to protect your portfolio before the Fed screws up (again)… Join Hedgeye CEO Keith McCullough Thursday, November 14th at 11am ET for the of our 4Q24 Macro Themes Mid-Quarter Update. Upgrade to Pro Risk Manager to get proactively prepare your portfolio with a comprehensive review of what we think will be the three most market-moving trends over the next 3-6 months. We'll leave you with this tease from Keith McCullough about what to expect during from this presentation: "The only way that you the People can outrun inflation is to own it." -Hedgeye
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