Market Forecast with President Trump’s Return to the Presidency

Wall Street investors will be keeping an eye on a number of factors with Donald Trump’s Inauguration Day around the corner.

Voters lit the fuse in November’s election, as the S&P 500, Dow Jones Industrial Average and NASDAQ all exploded with unbridled enthusiasm. The burning question is whether that sunny stock market forecast will
translate into actual returns.

Last year, we saw a return of 23% on the S&P 500, the second year in a row over 20%. So far this year, this index is trailing at about a 1%
decline. Inflation data is testing investors’ nerves, as it wobbled out of the gate on news of the Feds’ projected scaling back to only two rate
cuts this year. It expected inflation to rise at a faster pace than previously thought.

Regarding employment data, initial unemployment claims increased 1.52% over the same period last year. As of Jan. 9, the rate currently sits at 4.10%, considerably lower than the long-term average of 5.68%.

All eyes are focused on inflation reports, now showing an outsized market presence. Any returns higher than analysts’ forecasts can spark
further market volatility.

The market generally likes its chances for this year, but there are land mines, mostly set by the President himself. And this could derail a rally for 2025, given the recent jitters.

Trump is pro-business, but not all of his agenda is market-friendly. Potential headwinds with increased tariffs and reduced immigration may
lead to higher inflation, resulting in pressure on interest rates and ultimately challenging for the market.

Despite this, leading strategists insist that earnings will still steer in stocks’ direction, first and foremost. Led by the technology sector,
experts predict all sectors will gain ground with all stocks, from small- to large-cap. Opinions differ as to which sectors stand to gain the most.

Depending on your consult, the gamut ranges from health care to chip-makers and defense contractors. Investors are bracing for the Jan. 20 Presidential inauguration and quick action in areas such as tariffs, especially from China, Mexico and Canada. While China and Mexico may be valid, many believe his threats to Canada are hollow and used to negotiate stronger border controls, especially given the current weak leadership in the north country. Prime Minister Justin Trudeau recently stepped down amid scandals, corruption and general economic
mayhem.

However, should that 25% tariff on Canada be implemented, it could have devastating effects on both countries’ economies, as Canada is the United States’ largest trading partner.

My opinion is that the Magnificent Seven, comprising of Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta and Tesla, will still hold the power, as collectively they hold about 35% of the market capitalization. Add to this, analysts’ opinions of their valuation. Some argue they are overvalued due to market dominance. Others claim they are actually undervalued considering their strong earnings performance. Never have so many analysts been so divisive on so much.

Bottom line: watch for elevated volatility that can shake SPY to its knees, the same day you may see record highs. If nothing else, we may
see most interesting several years to come in a very long time!

People often ask why I don’t like to buy and hold. It is for this very reason: I am clueless as to where the market will be a year from now, a
month from now or even a week out. It appears that not many “gurus” can predict either, given their differing opinions. We can, however,
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