Part 7/11:
The specific policies pursued immediately after an election can significantly influence market reactions. For example, if a Republican president first pushes through tax cuts and deregulation, markets might rally. Conversely, if trade tariffs, immigration restrictions, and border security become priorities, markets could react negatively, fearing economic slowdown or inflationary pressures.
The Federal Reserve’s monetary policy stance will also be a critical factor. Tightening or easing measures in response to the new political landscape can either support or hinder economic growth. For instance, aggressive trade policies that trigger inflation could constrain the Fed from easing monetary policy, impacting borrowing costs and investment flows.