Macrosynthesis  

TLDR

• Trump wins big, securing 312 electoral votes
• GOP solidifies power in Congress and key state races
• Fed cuts rates again, boosting market confidence
• Tesla jumps on Trump alliance; regional banks rally
• Upstart and Astera Labs surge on strong earnings

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A Seismic Shift in U.S. Politics

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Well, what a week it has been. The 2024 U.S. presidential election, which was expected to be one of the closest and most contentious races in recent history, was called in less than 24 hours after President Trump secured decisive victories in all of the key swing states. VP-elect Vance attributed the complete failure of polling data to predict results on the fact that democrats are much more likely to participate in polling.

When the final results were tallied, Trump emerged victorious with a commanding 312 to 226 electoral college win, while also winning the popular vote by nearly 3%. This marks a dramatic shift in the U.S. political landscape, with the Republican Party now firmly in control of both the Presidency and Senate, with the House of Reps looking like it's also going to republican control as the votes are still being tallied. Across the nation, republicans also secured victories in the majority of gubernatorial races, cementing its grip on state-level governments as well.

The results have sent a clear message to democratic lawmakers that still have jobs: the American people do not support your agenda and it must change to earn more votes. Trump's campaign of tackling inflation, averting global conflicts, prioritizing spending on Americans, and stopping illegal immigration allowed him to make history as the first convicted felon to ascend to the Presidency. He made history again last week, by appointing his campaign director to be the first female Chief of Staff.

Trump and Market Implications for the Next Four Years

With Republicans about to enjoy absolute control over the federal government, as well as a majority of state houses, the stage is set for the new Trump administration to push through its ambitious legislative agenda with minimal obstruction.

Key Trump and GOP priorities include:

• Further tax cuts and deregulation to spur economic growth.
  • JPM rallied 9% this week.
  • COIN rallied 50% on hopes for more lax crypto regulation.
• Stricter immigration policies and border security measures
  • GEO, a private prison company who would benefit from increased ICE imprisonments, rallied 80% this week.
• Rollback of environmental regulations and a shift away from renewable energy.
  • FirstSolar dropped 9% this week.
  • XOM rallied 5% this week.
• Increased spending on military and infrastructure (roads, bridges, airports) while forcing NATO allies to fulfill spending obligations.
• Reducing the number and power of federal workers by making it easier to fire them
• Payback for Iran's foiled assassination attempts of Trump, which will likely include sanctions on oil sales, freezing Iranian assets, and releasing pressure on Israel, enabling them to take out Iran's nuclear weapons ambitions
• Increased tariffs on imports for countries that abandon the U.S Dollar, levy tariffs on American imports, or provide government subsidies for their exports.
  • NUE, an American steel company, rallied 10% this week.
  • U.S. auto manufacturers set to gain from these policies, also rallied

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Market Impact and Outlook

Financial markets have reacted positively to the election outcome, with the S&P 500 and Nasdaq reaching new all-time highs in the immediate aftermath. Investors appear to be betting on a continuation of the pro-business, tax-cutting policies that characterized Trump's first term.

However, the road ahead may not be entirely smooth. Heightened political polarization, potential trade tensions, ballooning federal debt, and the looming threat of a recession could introduce volatility and uncertainty into the markets.

Nonetheless, with the Republican Party firmly in control, the general consensus among analysts is that the next four years will see a continuation of the economic trends that have defined the previous Trump presidency - for better or for worse.

Overall, the S&P 500 and Dow logged their best weekly performance since November 2023, each gaining 4.7%, while the tech-heavy Nasdaq led the charge with a 5.9% surge.

Fed Cuts Rates 25 Basis Points Again

The Federal Reserve's decision to implement a second consecutive interest rate cut, lowering the benchmark overnight borrowing rate by 25 basis points to a target range of 4.50%-4.75%, also contributed to the market's optimism. The move was unanimously approved by the Federal Open Market Committee, in contrast to the previous rate cut which saw the first "no" vote from a Fed governor since 2005.

Weekly Sector Recap: Consumer, Tech, and Energy Stocks Soar

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Last week saw a mixed performance across the S&P 500 sectors, with Consumer Discretionary leading gains at +7.6%, followed by Energy (+6.2%), Industrials (+5.9%), Financials (+5.5%), and Information Technology (+5.4%). Sectors with more modest increases included Telecom (+3.7%) and Real Estate (+2.7%), while Consumer Staples and Utilities each rose by +1.2%. Healthcare (+1.6%) and Materials (+1.5%) also posted small gains, reflecting overall positive momentum across the index, with strong growth particularly in consumer and energy-related sectors. Notably, egg prices surged over 100% as a severe wave of Bird Flu impacted farms nationwide, putting additional pressure on Consumer Staples.

Upcoming Week

In the United States, attention will center on consumer and producer inflation data, retail sales figures, and speeches by Federal Reserve officials. These events will offer insights into the health of the economy and potential directions for the Fed's future monetary policy decisions. In China, significant data releases will include new yuan loans, fixed asset investment, industrial production, retail sales, and the house price index, all of which will shed light on the country’s economic momentum and policy outlook.

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Propane

+13.01%  (1W Chg)

+20.36% (YTD Chg)

Silver

-3.76% (1W Chg)

+31.37% (YTD Chg)

Orange Juice

-13.56% (1W Chg)

+45.53% (1M Chg)

Eggs

+109% (1M Chg)

+206% (YoY Chg)

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Company News

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LevelFields AI Alert Highlights This Week

This week, LevelFields alerts yielded impressive gains. GEO surged 42% after a quick sprints alert, while AGFY rose 40% on news of the CEO’s departure. FRSH increased 28.5% following a $400M stock buyback announcement. HCKT climbed 17.5% after expanding its repurchase plan by $20M, bringing the total to over $31M. CEVA also gained 16.5% after announcing its own stock buyback.

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Tesla Stock Rallies 31% on Trump Win

Tesla’s market cap reached $1 trillion following Donald Trump’s recent election victory, which has driven a surge in the company’s stock. For the rumored $50 million Musk invested in Trump's campaign, Tesla's market cap increased over $200 billion in a week. Tesla CEO Elon Musk’s alliance with Trump is anticipated to benefit Tesla by potentially influencing policies on self-driving vehicle regulations, giving the company a competitive edge. Musk’s active support for Trump included founding a super PAC and agreeing to lead a Department of Government Efficiency (DOGE) to reduce federal spending. Trump’s win could disadvantage other automakers as he may freeze EV tax credits, a move Musk says would hurt competitors a lot more than Tesla.

Upstart Stock Gets Jump Start

Upstart Holdings’ stock soared 46% to $80.81 after the company posted better-than-expected third-quarter earnings and raised its outlook. The AI-based lending platform reported a smaller-than-expected adjusted loss of 6 cents per share, beating Wall Street’s anticipated 15-cent loss, with revenue growing 20% year-over-year to $162 million. CEO Dave Girouard announced that Upstart is “back in growth mode.” Analysts at J.P. Morgan and Needham praised the company’s performance, noting positive trends and improved profitability prospects amid declining interest rates.

Astera Labs Stock Rockets on Earnings

Astera Labs’ stock jumped 33% after strong earnings, with adjusted EPS of 23 cents beating Wall Street’s forecast of 17 cents, and revenue up 206% to $113.1 million. The semiconductor company, which supports Nvidia’s AI infrastructure, exceeded expectations with its Q4 guidance. Analysts are bullish, citing Astera’s expanding product line and key partnerships with Nvidia, Amazon, and AMD, positioning it as a leader in AI infrastructure.

Regional Bank Stocks Rise on Optimism

Regional bank stocks soared on Wednesday, marking their strongest day in four years, driven by investor optimism over Donald Trump's expected pro-business policies. The SPDR S&P Regional Banking ETF surged 13.4%, while the Russell 2000 index, heavy in regional banks, rose 6%. Tailwinds for the sector include increased lending, lower corporate taxes, regulatory easing, potential mergers, undervalued stocks, a steep Treasury yield curve, and underweight positioning, all favoring regional banks under Trump’s administration.

Toast Stock Jumps on Earnings Beat

Toast Inc.’s stock surged 20% this week after reporting better-than-expected third-quarter revenue. The restaurant-focused digital payment platform posted a net income of $56 million, or 7 cents per share, marking a significant turnaround from the previous year’s $31 million loss, or 9 cents per share. Despite a slight profit miss, the strong revenue performance boosted investor confidence.

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