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Republican candidate Donald Trump is projected to be the 47th president of the United States, and Republicans are projected to control the Senate.
We focus on coming changes in fiscal policy, trade, immigration, energy and regulation – and stay overweight U.S. stocks.
A Trump administration will look to extend the expiring provisions of the Tax Cuts and Jobs Act, but control of Congress is key. Republicans are also likely to propose new tax cuts, potentially including to corporate taxes.
The Trump administration will take a very different approach on foreign policy. Trade will be front and center. Trump has proposed a wide range of tariffs, including 60% tariffs on China and 10-20% broad tariffs. Implementation is uncertain, but if enacted, such policies could reinforce geopolitical and economic fragmentation, which is a structural force we see keeping inflation higher in the medium term.
A reduction in legal immigration could impact the labor market.
Trump’s win likely means some deregulation, including the rolling back of regulations for banking. Big tech may remain a bipartisan antitrust focus.
We see Republicans aiming to boost energy production, though U.S. production is already at record levels and ramping up production takes time.
A Trump administration could look to scale back elements of the Inflation Reduction Act, like electric vehicle credits – though full repeal seems unlikely.
In the near term, the election results reinforce our preference for U.S. stocks over Europe.
We see U.S. equities supported by solid economic growth, strong corporate earnings growth and Federal Reserve interest rate cuts.
Longer term, much depends on how Trump’s agenda is enacted. We think de-regulation could benefit the energy, financial and tech sectors.
We are neutral long-term U.S. Treasuries, preferring medium-term bonds and some quality credit for income. But we expect yields to rise over time as investors demand more compensation for the risk of holding bonds.
Closing frame: Read details: blackrock.com/weekly-commentary
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Staying invested is important regardless of who wins, as markets tend to be agnostic about which party controls the White House. Do your best to keep politics out of your portfolio.
Macroeconomics, fiscal and monetary policies, corporate earnings, and investor sentiment play a more significant role in market performance than which party holds the presidency.
Resilient economic data, strong U.S. growth expectations and a declining rate environment continue to bode well for broader themes like income, value and quality equities.
When headlines about the market turn worrisome, many feel they must sell to mitigate losses. But doing so may cause clients to miss out on a rebound, as the worst and best days tend to surround each other. Educate clients on how acting impulsively and consequently missing top-performing days, can have a major impact on long-term financial goals.
Source: BlackRock; Bloomberg as of 12/31/2023. Stocks are represented by the S&P 500 Index, an unmanaged index that is generally considered representative of the U.S. stock market. Past performance is no guarantee of future results. It is not possible to invest directly in an index. Index performance is shown for illustrative purposes only.
Don’t let clients flee to cash and miss out on potential long-term growth. Instead, seek to reduce risk in portfolios, while staying closely aligned to a steady asset allocation.
Objective | Fund Name | Ticker | ETF or mutual fund | |||
Buffer ETFs | ||||||
Seek to reduce volatility in your equity sleeve |
iShares Large Cap Max Buffer Jun ETF > | MAXJ | ETF | |||
iShares Large Cap Moderate Buffer ETF > | IVVM | ETF | ||||
iShares Large Cap Deep Buffer ETF > | IVVB | ETF | ||||
BuyWrite ETFs | ||||||
Seek income to potentially buffer price volatility | iShares 20+ Yr Treasury Bond BuyWrite Strategy ETF > | TLTW | ETF | |||
iShares S&P 500 BuyWrite ETF > | IVVW | ETF | ||||
BlackRock Advantage Large Cap Income ETF > | BALI | ETF | ||||
Alternative funds | ||||||
Seek differentiated returns with alternative strategies |
Global Equity Market Neutral > | BDMIX | Mutual fund | |||
Tactical Opportunities > | PBAIX | Mutual fund | ||||
Systematic Multi-Strategy > | BIMBX | Mutual fund |
The funds listed in the table above have been chosen by BlackRock and iShares product strategists to help represent potential investor portfolio objectives. The scope of the funds under consideration are iShares ETF and mutual fund offerings. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular and is subject to change.
Sometimes what poses the biggest risk to achieving your long-term goals is your emotions. This is especially common during large fluctuations in the market but can also happen during ordinary market cycles.
The further the market goes up, the easier it is to believe it’s going to go up forever, which can lead to buying near the top of the market. On the other hand, the lower the market falls, the more fearful you may become of losing more money, which can lead to selling near the bottom of the market.
Following this pattern is called “herding”. When the market is high, it’s because many other people have already bought in – which is why buying in would be considered “following the herd”. When the market is low, it’s because many other people have already sold.
As you might have guessed from the title of this piece, “following the herd” often backfires over the long-term.
As you can see in this chart, doing what everyone else is doing (represented by the orange bar) produced significantly smaller average returns than going against the herd, or even the market average itself. That’s why it’s really important to make your decisions based on your plan and convictions, not on market trends.
In the words of the great investor Warren Buffet, “Be fearful when others are greedy, and greedy when others are fearful.” But also remember, time in the market almost always trumps timing of the market.
Investing based on emotions can lead investors to buy high and sell low. Use our chart to help clients overcome their desire to make investment decisions based on emotions rather than convictions.