As investors consider how to approach the market following the US election outcome, Sanders Morris’ George Boole reveals what he’s currently looking for. The chairman of the US-based Wealth Inc. said: “The post-election rally has been crazy and probably came too soon. However, it does show that investors have confidence that business and earnings will be better under the (Donald) Trump administration.” will be strong. Still, he warned that there is “schizophrenia” in the bond market that could “exacerbate some of the indecision and some correction in the stock market.” Stocks tend to feel uneasy when Treasury yields spike, especially growth. stocks because rising yields could hurt their expected future returns. “There’s a lot of concern that the tax situation in the U.S. will fuel inflation. So investors are on one side saying these (bond) yields are quite attractive. , let’s buy them. On the other hand, they think, gosh, if the deficit goes to $2 trillion a year without limits, the bond vigilantes … are going to take over again,” he said, referring to the new administration’s leadership. The fiscal deficit is expected to rise. That could lead to increased government borrowing, which could boost yields. The term “bond vigilantes” refers to a situation where fixed-income traders avoid or sell government debt, forcing yields higher. President-elect Trump has previously vowed to enact tax cuts such as Social Security and corporate income taxes, leading many to predict that U.S. borrowing will increase as tax revenues fall. The Nasdaq Composite, S&P 500 and Dow Jones Industrial Average took a break mid-week on the back of post-election moves and the Federal Reserve’s additional 25 basis points rate cut last week. Meanwhile, the benchmark 10-year Treasury yield is hovering around 4.47%. Looking to the future, Bull believes “the excitement of the moment will fade.” “The threat of bond vigilantes will suppress animal spirits, although they will not be conquered,” he said in a research note. “To the extent that fixed income markets will decide what constitutes fiscally irresponsible behavior, they will trump the Fed.” Yes.” CNBC. The wealth manager expects the 10-year U.S. Treasury note rate to reach 5% by the end of the year. He said this phenomenon is both “an opportunity to lock in high yields and a signal to the new Trump administration and Congress that the budget is important.” “This is an advantage for people seeking income, especially retirees and seniors,” he said. When it comes to Trump’s tax cuts, Burr noted that the president-elect will likely lower taxes as he did during his first term. However, he expected new taxes to be imposed “in a vague way”, such as major minimum taxes on corporate earnings and limits on deductions. Market Game Against this backdrop, wealth managers are playing a market game against “companies that pay taxes on all income, not just income after deductions and shelters.” The energy industry is one of the industries Trump is focusing on, given his motivation to fight inflation by lowering energy costs. The companies he bet on include “well-positioned” companies such as Enterprise Product Partners and Energy Transfer, which have annual dividend yields as high as 6.88% and 7.58% respectively. Banking is another bullish area, with him describing U.S. community and regional banks as “attractive.” “They’ve been rising for a few days, but they’re still well below their previous prices. As the economy gets stronger, coupled with more sensible regulation, they’re worth watching,” he said, referring to Texas-based Veritex. Holdings named it an example of a company he likes that is “well-managed, growing (and) capital conservative.”
Wealth manager reveals how he behaves when optimism fades | Real Time Headlines
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