USA: Post-Election Changes in Sentiment

It can be useful to see what changes the market impounded over the post-election trading session. We look at the 3-day changes from 5-Nov-24 through 8-Nov-24.

NB: apologies to those subscribers who see this twice. There was a glitch in distribution which caused it to go to only a few folks. I republished it.

The yabby is back on track after being bumped off course by a pesky bacterium that is now undergoing anti-biotic carpet bombing at Royal North Shore Hospital.

I am okay now, and well on the road to recovery.

However, that is all down to the splendid medical care and diagnosis at this hospital.

Royal North Shore Hospital saved my life ten years ago with a massive DVT and PE.

I know the emergency room well at this hospital because I went in ten years ago with a massive Deep Vein Thrombosis (DVT) and Pulmonary Embolism (PE).

They saved my life then with a nighttime procedure and then put me back on my feet.

This time around, it was one of the same doctors in ER, who spotted warning signs of a stroke and put me into care. This was a complex diagnostic story, but it wound up being solved by advanced medical imaging, specialist care, and blood cultures.

It would appear that I am the lucky winner of a bacterial lottery caused by some pesky little bug called Enterococcus faecalis, leading to a mild case of infective endocarditis.

Mild is good, because that is a bacterial infection which causes huge damage if left to go rogue. Fortunately, the team here found out what was ailing me early in the saga.

For that I am eternally grateful, and once again I salute a great hospital!

Thank you!

With the medical imaging coming out a winner, I am having a longer look at modern medicine, biotech and medical instruments. Folks like me are here because of them.

However, to get back on the horse, I am doing a quick US Post-Election analysis.

Normal levels of service will be resumed once I am back home.

The post-election market reaction

The election result is old news now.

Trump won the popular vote and looks likely to have a clean sweep.

There is much to learn of forthcoming policy initiatives, and the personnel who are going to hold key posts in the Administration. Mindful of the news yet to come, I focus here on the broad market reaction, which was swift and positive.

The key takeaway from this short note, is the market broadly bought stocks, and has not taken a very discriminatory view, outside of a few areas like cryptocurrency.

This is consistent with the Trump platform to jawbone easy money from the Federal Reserve, impose punishing tariffs on China, of 60%, and 10% on everybody else.

Perhaps the key driver of the move was the mooted 15% corporate tax rate.

That tide lifted all boats, as we now demonstrate.

One strong Bull Market.

At the top level, it is worth looking at the state of investor unrealized profit and loss across the 2,000 odd liquid US stocks we cover. Average sentiment is positive across the board, with the average large-cap unrealized profit and loss above 40% in all ten sectors of the market. This is an incredibly robust bull market in play.

In such circumstances, it pays to simply buy the market with a suitable ETF.

The Russell 2000 small cap ETF is one such play IWM.

Post-Election stock market sentiment is very robust across all sectors.

Another way to analyze the market is to look at the lift in sentiment in the three days following polling day. This covers the period when the result was declared.

The immediate post-Election lift in sentiment was greatest in large cap stocks.

Notice again that large-cap stocks captured most of the improvement in sentiment, which is not surprising since these are the most liquid stocks to trade.

Digital Technology was the biggest mover but note that Analog Technology also put in a strong performance. This is perhaps the first indicator of differentiation, as this sector contains traditional industrials like manufacturing companies.

We would expect industrials to do well under the Trump agenda, since competitive firms will simply become more so with the 10% and 60% tariffs to be imposed on foreign competitors exporting into the USA.

This is a Trump flagship policy so a deep dive on industrials seems warranted.