Trump’s pro-business agenda – including expected tax cuts and deregulation – could boost corporate profits. However, the proposed tariffs on Chinese, Mexican and Canadian imports introduce risks. Market optimism could quickly reverse if trade policies raise costs and shrink profit margins. Traders should brace for market pullbacks, especially around Trump’s inauguration on January 20, when executive orders are expected on energy, immigration and crypto policies.
Could the debt ceiling drama disrupt the rally?
The US Treasury Department’s warning that “extraordinary measures” may be needed by January 14 to avoid a default underlines a looming threat. Congress has suspended the debt ceiling through 2024, but its reinstatement in January makes the issue more urgent. If lawmakers fail to extend borrowing limits, bond markets could face disruption, sending investors fleeing to safer assets.
Furthermore, the current funding law only applies until March 14, leaving the possibility of a government shutdown in Trump’s first 100 days. Political infighting in Congress could complicate negotiations, raising concerns about budget stability. Traders should keep a close eye on regulatory developments as slowdowns could ripple through equity markets and weigh on consumer confidence.