Gerardo Del Real,
Editor
Nov. 6, 2024
America has voted, the results are in, and regardless of how anyone feels about those results, we just witnessed one of the greatest comebacks in American political history.
So what now?
What now will largely depend on which Donald Trump governs and who he chooses as his advisors.
Gold is down 2.4%, silver is down nearly 4%, copper is down nearly 3%, and Bitcoin is up to new record highs. This is on the back of a 1,300 point pop on the Dow and a dollar index that is now above the 105 level and up some 2%.
The immediate reaction in the markets is a clear indication that the market believes the rhetoric from President-elect Trump. The question is… does he follow that gameplan or, like I expect him and every other politician to do, roll out a moderate version of what he’s on record as saying.
What he has said is that he would bring in Elon Musk to make drastic and necessary cuts to the budget. Hence, the reason for the surge in the dollar.
How and if he manages to do that will be consequential. Republicans have the votes to do it. Do they have the political will to make cuts in districts they just campaigned in will matter. The elephant in the room is the defense budget.
Do I believe Republicans are rushing to get back to their districts and states to explain why military bases are being defunded? I don’t believe either side has the political will but defense budget cuts have to be made if the $36T deficit, and the interest on it, is in any way mitigated or addressed.
Also consequential will be if he follows through on promises to undo much of President Biden’s Inflation Reduction Act. The comically-named legislation has had a very positive effect on furthering the establishment of an independent critical metals supply chain.
The North American lithium and uranium space has benefited from the legislation, and it will be interesting to see how Mr. Trump proceeds in that regard, especially in light of the influence Elon Musk will have on the administration and the talk of tariffs on Chinese goods that make it here to the US.
Then, there’s Jerome and the bond vigilantes. Jerome has to cut rates but the bond market doesn’t seem to care or want to play nice. This week’s upcoming Fed meeting will be an important one more so for the tone and language used than the actual decision to cut.
Taxes, Bitcoin, Jerome, tariffs… I could go on but you get the picture.
I’m glad the election is over, and I’m glad there will be a peaceful transition of power. Be absolutely clear that the next four years will be transformative ones for our great experiment we call America.
Let’s get it!
Gerardo Del Real
Editor, Daily Profit Cycle