QTR’s Fringe Finance: Market Right Now Is “A Story of Contrasts”
While the stock market has snapped back some weakness to start trending higher in the past week, structural problems remain.
Corporate America is excited about the incoming Trump administration. The economic focus on deregulation and keeping tax rates at their current level, or even lower, is generally bullish. However, tariffs could ignite a trade war, which could lead to another round of inflation. That’s just one contrast.
In that scenario, domestic companies like banks and other financial stocks could fare well. Ditto for smaller energy companies focused on domestic exploration.
For companies with significant global operations, the picture can be a bit murkier. That’s also true for tech companies. Many of today’s semiconductor manufacturing is done overseas. Domestic facilities are being built or retooled for advanced AI chips. But they aren’t ready yet.
And while consumer spending is strong, so is rising credit card debt and delinquencies. If consumers have to slow their spending, the economy could easily slip into a recession.
For now, we’ll know more as specific policies are released from the White House. And as companies report earnings and note on potential dangers.
In this kind of environment, investors and traders should look to scale back aggressive trading. And shouldn’t try to force a trade just for the sake of trying to score a quick profit.