Markets React To Post Election Results – Domestic Equity Overview

The S&P 500 Index had its best post-election day in history, rising 2.5% on November 6th. The expectation of deregulation and low corporate taxes drove stocks higher as election results fueled equity prices, particularly for small-capitalization companies.

Equity indices struggled in October as uncertainty regarding the outcome of the election and the fate of corporate tax rates lingered throughout the month. Only three of the eleven sectors of the S&P 500 Index were positive for the month. Historically, higher tax rates for corporations lead to decreased earnings and capital investment.

U.S. equities remain supported by tepid economic expansion and broadening earnings across all sectors, yet uncertainties about the budget deficit, trade, and the strength of the dollar continue. (Sources: S&P, Dow Jones, Reuters, Bloomberg)

Long-Term Yields Rise Leading Up To Election – Fixed Income Update

Anticipation of economic growth policies proposed during the campaign prompted the possibility of elevated inflationary pressures, driving bond yields higher. Many of the proposed policies will require Congressional approval before being enacted.

The Treasury market reacted to the growing concern about an expanding government deficit and the massive issuance of federal debt to fund current and future deficits. As a result, longer-term Treasury bond yields rose, implying that stubborn federal deficits may continue for years.

The yield on the benchmark 10 year Treasury bond rose to 4.28% at the end of October, up from 3.81% at the previous month end. Short-term bond yields rose less as the Fed prepares to continue cutting the Fed Funds rate in line with projections. (Sources: U.S. Treasury)

Largest Hurricane Losses – Insurance Overview

As flood waters recede in the south and eastern seaboard states, Hurricane Helene is on track to be one of the costliest natural disasters in U.S. history. Not since Hurricane Harvey in 2017, and Katrina which ravaged Louisiana in 2005, have insurance companies been levied a similar cost of settlement claims.

Moody’s estimates a total of $20 billion to $34 billion in losses from the damage caused by Hurricane Helene. Other financial impact estimates run higher, with the inclusion of uninsured businesses and individuals. The storm inflicted widespread damage across numerous states, destroying and crippling power facilities, agriculture, roads, bridges, water reclamation, schools, and business operations among various industries. Historically, rebuilding efforts following natural disasters including hurricanes have led to pockets of economic growth. The enormous cost of Katrina in 2005 led to over a hundred billion dollars for rebuilding homes, roads, buildings, and re-establishing businesses. (Sources: NOAA, Dept. of Commerce, Moody’s)

Subscription Cancellations Are Now Easier Due To New FTC Rule – Regulations

In order to address the difficulty and annoyance of canceling unwanted subscriptions and memberships, the Federal Trade Commission (FTC) adopted new rules to protect consumers and facilitate the cancellation process. The FTC plans to impose fines and penalties to those vendors that don’t comply or fail to fulfill the required mandates.

The FTC’s “Click-to-Cancel” rule is aimed at making it easier for consumers to cancel unwanted subscriptions and memberships by requiring businesses to provide a cancellation process that is at least as easy as the sign-up process.

If consumers signed up online, they must be able to cancel online without having to interact with a representative. For telephone sign-ups, a telephone cancellation option must be available during business hours at no additional cost.

The “Click-to-Cancel” rule takes full effect 180 days after publication in the Federal Register of the FTC, which is expected to be around April 14, 2025. (Source: Federal Trade Commission)

Why Consumer Confidence Is Falling – Consumer Behavior

Jobs and income weigh heavily on consumer confidence, as the ability to pay essential expenses are a significant concern for millions of Americans. Consistent inflationary pressures drain consumers while leaving less for discretionary expenditures, such as eating out and movies.

Consumer sentiment fell for the first time in three months, as frustrations with lingering inflation and a weakening employment market pressured consumers to redirect their funds and cut certain expenses.

Some economists believe that the uncertainty surrounding the presidential election has been a factor over the past few months, as future tax rates and economic growth are unknown factors. (Sources: University of Michigan)

The Future of The Tax Cuts and Jobs Act – Tax Policy

The Tax Cuts and Jobs Act (TCJA), which passed in 2017, made tax rate cuts for businesses permanent, but tax cuts for individuals are scheduled to expire at the end of 2025. With the newly elected administration, it is expected that the tax cuts and provisions will become permanent with Congressional approval.

The Tax Cuts and Jobs Act became effective on January 1, 2018, modifying tax rates for single and married tax payers. Certain deductions were either capped or eliminated, including the deduction for state and local income tax, sales tax, and property taxes, known as the ”SALT deduction” which was capped at $10,000 per tax year. The standard deduction nearly doubled, from $12,700 to $24,000 for married couples, and from $6,350 to $12,000 for individual filers. (Sources: IRS, Tax Foundation)