To The Moon

I. Performance and Valuation of Global Equity Indices

Data Source: Bloomberg, compiled by Tiger Brokers

II. Key Market Themes

i. Trump’s Decisive Victory and Republican Sweep: Implications for U.S. Equities, Bonds, and the Federal Reserve

• This week, the final outcome of the U.S. election revealed a sweeping win for Trump, who captured all seven battleground states and decisively secured the presidency. Additionally, the Republican Party achieved a majority in both the Senate and the House of Representatives, establishing unified governance across the executive and legislative branches. Over the coming four years, Trump’s policy implementation is likely to become smoother and have broader impacts.

• Market reactions have been particularly notable, with beneficiaries like DJT and Tesla $特斯拉(TSLA)$ diverging in performance. We believe that as the election results settle, assets that rallied purely on speculation and lack fundamental support may face sell-offs. Conversely, companies such as Tesla, which have robust fundamentals, stand to benefit significantly from more supportive regulatory conditions, accelerated technological advancements, and broader policy backing. This trend is expected to create not only short-term impacts but also greater clarity in the medium to long term.

Data Source: CNN Politics

• The impact of the election result quickly reflected across U.S. equity markets. In the past week, the S&P 500 $标普500(.SPX)$ and Nasdaq posted gains of nearly 5%, while the Russell 2000 small-cap index surged by 8%. This is partly due to the removal of election-related uncertainties, reducing market risk and volatility. More importantly, Trump’s core policy framework of "tax cuts + deregulation" is inherently supportive of corporate profitability. According to Goldman Sachs estimates, fiscal and tax policies could add 3.9% to the S&P 500’s value.

• However, Trump’s other core principles—"higher tariffs + restrictive immigration policies"—could counteract declining inflation and introduce new economic uncertainties. Some institutions, drawing from Trump’s 2016 presidency, speculate he may take a symbolic rather than substantive approach to these issues. However, we believe that 2024 is markedly different from 2016. Trump now wields significant influence within his party, affording him ample motivation and latitude to pursue his political agenda. Currently, it is more prudent to assume his commitment than to doubt it. Nonetheless, for U.S. equities, steady earnings remain the ultimate metric.

Data Source: Goldman Sachs Global Investment Research

• Two days after the election, the FOMC lowered interest rates by 25 basis points, as anticipated. The Fed removed some inflation-related language from its statement. When asked about it, Chairman Powell explained that the Fed now believes inflation is under control and no longer requires constant focus.

• Notably, Powell adopted a firm stance on election-related inquiries, stating, “The election will have no influence on the Fed’s operations; we do not speculate or make assumptions regarding future decisions.” He further clarified, “Under the law, the president does not have the authority to demand my resignation.”

• We believe Trump’s return to office presents a significant challenge for the Fed. Powell’s deliberate silence on inflation is intended to reassure markets against concerns of a potential second inflationary wave. Although the Fed has not officially recognized a shift in the neutral rate, market expectations for rate cuts in 2025 have been markedly reduced. With respect to U.S. Treasuries, we continue to see range-bound trading opportunities, though the volatility center may now be somewhat elevated.

Data Source: Bloomberg, compiled by Tiger Brokers

Disclaimer

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