“Invest for the long haul. Don’t get too greedy and don’t get too scared.”
-Shelby M.C. Davis
Here’s what you need to know this week:
- Stocks post their best week of the year
- Republicans are on the cusp of a clean sweep
- The Federal Reserve cut interest rates again and Chairman Powell defended his job security
Relief Wave
The S&P 500, Dow Jones, NASDAQ and Russell 2000 all enjoyed their best week of the year and reached new all-time highs in the aftermath of the election. The S&P 500 rose above 6,000 for the first time and has still stayed above 6,000 as of writing. This marked the S&P’s 50th all-time high of the year and puts the index on pace for its best year since 1995[1]. Investors are clearly feeling the post-election relief: the CBOE’s Volatility Index has fallen 35% since the election and is now at its lowest level since early August[2].
Red Wave
On top of winning the Presidency, Republicans have secured a majority in the Senate and are on pace to secure a slight majority in the House of Representatives. As of writing, the GOP has secured 215 House seats and are favored to win six of the remaining 10 uncalled races, which would put them above the 218 majority threshold[3]. If this trend holds then President Trump will have more leverage to enact his agenda.
Markets have reacted positively to this “red wave” so far. Republican Congressional leaders say that the first priority of President Trump’s second term will be taxes. Experts expect Congress to extend the tax cuts implemented by the Tax Cuts and Jobs Act of 2017, many of which are currently set to sunset at the end of 2025. President-elect Trump has also proposed additional tax cuts such as taxes on tips, overtime pay, and an additional cut to corporate taxes.
Fed Wave
Federal Reserve interest rate announcements are usually blockbuster market events but last week’s announcement took the backseat to the election. Nevertheless, the Federal Reserve did announce a 25 basis point (0.25%) interest rate cut as most analysts expected. Investors are already looking ahead to next month’s rate decision: as of writing, the bond market is assigning a 65% chance of another 0.25% cut in December[4].
Fed Chairman Jerome Powell spoke shortly after the announcement to explain the Fed’s current line of thinking and also fielded questions on his job security. Powell was initially nominated to the Chairman role by President Trump in 2018 and was reappointed by Biden in 2022; Powell asserted that he fully intends to finish out his term until 2026, despite his sometimes-contentious relationship with President Trump in the past.
Later this morning we will receive the Consumer Price Index (CPI) report for the month of October. Wall Street estimates expect the report to show monthly inflation at 0.2% and annualized inflation at 2.6%. Barring a large upside surprise, this report should increase the odds of another interest rate cut next month.
What Else
- President-elect Trump has already announced a flurry of nominations for his second term, including Senator Marco Rubio for Secretary of State
- The price of gold has fallen to a one-month low
- OKC Thunder star Chet Holmgren fractured his hip while playing the Golden State Warriors and is expected to miss 8-10 weeks
- OU & OSU are both on bye weeks this week
What We’re Reading
For more than 80 years, Major League Baseball has relied on one small supplier to deliver a special type of mud to rub on the baseballs in order to make them less slippery. The source and exact characteristics of this mud have long been shrouded in mystery, but a new scientific study lifts the veil on why elite baseball players have favored this mud for so long:
- https://www.nbcnews.com/science/science-news/why-baseball-mud-rubbed-on-balls-works-study-rcna178321
What’s Happening Downtown
The OKC Convention Center is hosting the Mistletoe Market this Friday, November 15th through Sunday the 17th. This market will feature more than 100 vendors from across the state and a portion of the proceeds will go to the Junior League of Oklahoma City. Click below to learn more:
Written by: Kane Ogle, CFP®
Steve Beck, Amber Eduvigen, CFP®, Kane Ogle, CFP®, Cale Olbert, CFP®, Brett Valentine, Brandon Ingerson, Jenni Hess, Anne Boone
Sources: [1] Yahoo! Finance [2] Yahoo! Finance [3] NBC [4] CME FedWatch