Scotiabank strategist Hugo Ste-Marie attempted to assess the some market winners and losers from the election result,
“US equities rallying, small caps surging. While US equity futures were up over 1% very early in the morning, when Trump was declared President elect, gains accelerated even more, with S&P 500 futures now pointing towards a 2%+ open this morning.
“We raise our 2024 SPX target to 5830 from 5535, assuming 21.6x 2025E EPS of $270 . The multiple expansion assumes our Econ Team’s year-end 10yr UST forecast of 3.8% and the current investment-grade credit spread of 83bps … This year many outperforming portfolios have been aligned with Growth and Price Momentum factors. A broadening out of the market and a move down cap will be a challenge to many active managers — as it was back in July . Buy the Election.
“The House is still up in the air—we expect a red sweep, but we may not know for a while. We’ve always argued that conditional on a Trump win, Republicans would likely win the House and thus secure a GOP trifecta … We would guess Rs narrowly win given the breadth of Trump’s gains … House control is relevant to markets primarily in terms of fiscal questions—tax cuts, IRA rollback, ACA tax credits, Medicaid cuts, and deficits/rates.