Stocks Surge and Another Rate Cut
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Welcome to the gel on money show. This is the program that takes the mystery out of your financial life, I hope. And it's been a crazy week, and I really just needed together my thoughts.

I've been working like crazy at C. B. S. And I want to talk a little bit about the election results and what I think IT means for you.

You know, i'm only going to be talking about the economy because that's kind of my lane, everything else sideline. okay. So just want to give you that as a process.

The first thing that happened at about four o'clock in the morning after the election is that I kind aroused myself up at around three, maybe four o'clock in the morning just to check the results saw which way IT was going. I looked at the futures markets and I said, wow, that's a big jump. But you know, back in twenty sixteen, I remember that the futures markets plunge overnight after trump looked like he had tied up the Victory and then opened on changed.

So I was kind of ready for anything, but I did sort of get the sense that this was a real rally. And boy was IT ever. At wednesday's closing bell, we looked up and we saw holy smokes.

The doll had added over fifteen hundred point three point six percent. S, M, P, five hundred was up by two and a half percent, the nasdaq was up by two point nine five percent, and the Russell two thousand index of smaller stocks of five point eight percent. There are some other things that were going on as well.

Bonds got hit. So the ten year treasury was down in Price, added fourteen basis points, closed over four point four to six percent. Bitcoin was up five, nine and percent.

All that is true. Okay, but I wanted to really dive into why that happened. And I was lucky enough yesterday to be on the air with cbs mornings to talk about just that.

So let's air that segment. Here is my appearance with our anchor net burleson on cbs mornings, talking about the day after the election, the markets, the economy and what's next. All right.

So what's behind the stock market jump?

Yesterday, i'd talk about investors are looking at two aspects of a pro growth trump presidency. They're saying, hey, the tax rates that were cut back twenty seventeen legislation, they're gna keep being as low as they are. They are going to extend those tax cuts. The second aspect is deregulation. So if you looked at the sectors yesterday that we're kind of interesting that really pot, energy, banking, crypto, all this together is what investors believe is going to be a pro growth economies that benefits pro growth companies are right?

So during his campaign, he talked about the across the board terrace. What does that mean? In what type of impact will I have on our pockets?

You what a this essentially is like a fee that slapped on an imported product and that adds to the cost to that product. So now we you're the person who brings that product in that company. Do you pass that along to the customer or not? That's the question.

If you do, when we see higher Prices, I think a lot of people could be surprised if we see across the board terrorists, we could see higher Prices possible. Also, what happens is we have a strength in dollar. That's great if you're going to travel abroad.

It's great if you're a domestic producer. IT is not good if you're an exporter. So we will have to wait and see what these terrace .

ultimately do to the economy. I conclude today, meeting today.

what's expected. So this is me scheduled nothing to do with politics of the fed has eight meetings a year. IT is expected that they're gona cut interest rates again by a quarter of a percentage point.

And really, the rational would be that the inflation rate is coming down. And I think that this is good news. If you're a borrower, obviously, because you want to see interest .

rates come down thirty eight to spite on wednesday.

why? okay. So mortgage rates are actually controlled not by the fed but by the marketplace.

And so what happens is when you look at those interest rates, we saw that bond Prices confusing. So no, no, no, that's one. Prices went down, yields went up OK.

And that is what those yields are key to. More treats are key to ten year treasury ies. Ten year treasury y'll went up.

why? Because what the community believes is that trump policies will add to the debt and the deficit. And that is a bad news for bonds. IT means that bonds are less valuable and interest strates could remain higher for longer.

So the federals are bored. They raise interest, combat inflation, IT work well.

sort of yes to say, yeah IT, we're on our way to a soft landing .

and that is good news. Soft landing is a good.

We get to the first meeting in just A D to little bit more on this question around bonds. I feel like do a great job describing that. But I think you guys may know more.

And the reason is that you probably own bonds. And if you note that you own a bond, you would understand that a bond is essentially alone to an entity, in this case the u. government.

So the idea that bond yields would jump, I think, as sort of two components to IT. The first is that, you know, if there is going to be a high growth economy, then that is actually something that would keep bond yelled tired. And if it's a high growth economy that is fuelled by tax cuts that are not paid for, that are borrowed in nature, then that would actually keep bond rates higher.

And if there are terms that come down the line and that creates inflation, that two would keep yield higher. We don't know where this is all going. We know that we've had an amazing first day of trading after an election. That's all we know.

We don't know the details of the policies, but I think for all of my nation about what's gona happen with the tax rates, that there's going to have to be a deal with congress to actually fix the individual tax rates. IT is now assume that a second trump administration will work to extend the tax cuts of twenty seventeen that went into effect in twenty eighteen. You probably don't remember this, but they were all supposed to sunset at the end of twenty twenty five.

They may not be able to put IT in stone, but they may make a temporary and push IT out again. We don't know all the sani gans that we talk about will take advantage of low tax rates. I think we might just have low tax rates for the foreseeable future for the next few years.

So that will be a very interesting decision point for congress. But also that is a real impact on your personal financial life. What is also going to have a big impact on your personal financial life is the federal reserve, which met later in the day after I done the segment and didn't, in fact, lower interest strates by a quarter of a percentage point.

You know, that was widely expected. But in the drone pile press conference after the announcement of the decision of the quarter point rate cut, there was a very pointed question that was essentially, if the president, like, were to ask you to step down from the fed chair position, would you? And his response was, no.

So how about that? Looks like drone pool is staying in place. Drone pols term as fed chair is a up in may of twenty twenty six.

So it's quite some time from now. So what can happen between now and then? And there's going to be a ton of information.

Are we really gonna these big tabs if they are going to be terrorists? Are we going to see inflation again? What is that? The path forward for growth? You know, it's a very different time coming into twenty seventeen verses coming in, in twenty twenty five, the president electrum.

And the reason is that the entire higher economy was really a sort of humming along, but at a lower level, back in twenty seventeen, interest strates were really low and the debt was lower. And so all these things are now compounded as we over into twenty twenty five. So all of these policies that we're talking about, keeping tax rates low, maintaining corporate tax rates that are low, putting terrace on imported goods, these can be inflationary and deficit problem in debt building in nature.

So we'll see if the bond vigilantes, the people who kind of freak out about the U. S. Governments in deadness, if they're really going to push the issue in the marketplace. So that's where we are to today at the end of a big week for the united states of america, a whatever side you voted for, wherever you stand.

I can't emphasize enough that, uh, I don't think IT makes a ton of sense to either cw about your win or sit on your pity pot and be worried about your loss. IT is time for action in your own life over the things you can control. So if you were a democrat and you're respondents about what happened, get out in your community and go do something.

If you are someone who voted republican, don't go, no, get out there and make people's lives in your community Better. Go down to the grassroots where you can make a difference. And I promise you, you're gone to feel so good doing that, and you will have faith restored in process.

I think that's really what we all need. And you'll have faith restored in institutions and maybe even faith restored in each other. So if you have a question, if you have a comment, if you're mad that I did took this to a political place or not political enough, feel free to send us a new good to gill and money to com.

Click to contact us, but let us know what on your mind. It's okay. We're all gna get through this, I promise.

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Smile, get some sunshine, take a walk, be good, do some good stuff. Change your work, change your, change your life. Thank you for listening.

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