Well, Election Day is finally over. We now have a pretty clear idea of who will run the U.S. government.
A red wave swept across the U.S. this week, with Donald Trump winning the presidential election.
I’m on the record stating that whoever won Pennsylvania would win the election – and that’s exactly what happened. Donald Trump actually won all three of the big “Blue Wall” swing states, Pennsylvania, Wisconsin and Michigan. The swing states of Arizona, Georgia, Nevada and North Carolina were also all red this time around.
Clearly, these folks were ready for a change.
The red wave that swept across the U.S. also poured into Congress. The Republicans secured the majority in the Senate, and they are closing in on a majority in the House.
In the meantime, Trump 2.0 was celebrated by the stock market this week.
All of the major indices soared higher on Wednesday following the election results. The S&P 500 jumped 2.5%, the Dow rallied 3.5% and the NASDAQ rose nearly 3%. Smaller-cap stocks led the surge on Wednesday, with the Russell 2000 up 5.8%.
Interestingly, stocks didn’t take much of a breather on Thursday. The celebration continued ahead of and in the wake of the Federal Reserve’s decision to cut key interest rates by 0.25% (you can get my thoughts on the Fed’s rate cut here).
So, now that the election is over, we can draw a reasonable conclusion that President Trump will have a mandate to largely execute his economic plan over the next two years without much pushback.
Of course, that has major implications for AI technology and the stock market.
So, in today’s Market 360, I want to share some thoughts on the election and how a Trump 2.0 administration may impact the market now that the dust has settled. I’ll also tell you how to prepare to profit from a second wave of the AI Boom now that Trump will be president.
Get Ready for an Economic Boom
There is no doubt, in my opinion, that manufacturing played a key role in the 2024 presidential election. The fact is that the U.S. manufacturing sector has been in a recession for more than two years.
The Institute of Supply Management (ISM) recently announced that its manufacturing index declined to 46.5 in October, down from 47.2 in September. Any reading below 50 signals contraction. Also notable, 11 of the 16 industries surveyed reported contraction in October.
Clearly, the folks in the big manufacturing states of Michigan, Pennsylvania and Wisconsin are ready for a change.
And Trump 2.0 is anticipated to ignite that change with a manufacturing turnaround.
The Trump administration is expected to help the manufacturing sector expand via tariffs against unfair competition overseas, lower interest rates (with the Federal Reserve’s help) and cheaper energy prices that give the U.S. a natural advantage compared to Europe, Japan and other competitors.
If these can be accomplished, then, in theory, the U.S. should experience a manufacturing boom.
Let me break down each of these categories to explain further…
Tariffs: The concerns over higher U.S. tariffs are unwarranted. The new Trump administration plans to level the playing field and treat our trading partners as they treat us. As an example, if the European Union (EU) slaps a 10% tariff on exported U.S. vehicles and the U.S. only imposes a 2.5% tariff, then the EU has the choice to lower tariffs on U.S. exports or the U.S. can raise tariffs to 10% on European imports.
Interest Rates: Treasury yields jumped in the wake of the Trump victory, with the 10-year Treasury yield rising as high as 4.478% on Wednesday. Yields are rising in anticipation of higher budget deficits and more robust economic growth. Remember, the Fed never fights market rates. So, I now expect that the Fed will “pause” after its 0.25% rate cut on Thursday, keeping the fed funds rate between 4.5% and 4.75% in the near term.
Energy: Trump 2.0 is anticipated to spur a domestic energy boom. This will help onshore manufacturing, as well as fuel the AI cloud computing boom. Remember, the utility grid needs to double over the next decade in order to meet demand for AI and cloud computing. Since the Trump administration is more fossil fuel-friendly, natural gas will likely be utilized to boost electricity output. That will ignite a boom in the natural gas industry, as well as help expand the U.S. utility grid.
So, this Trump presidency means a second boom is coming for AI stocks… and I want you to be prepared. That’s why I’ve identified six specific AI stocks that will benefit from this coming boom.
Sincerely,
Louis Navellier
Editor, Market360
