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As Donald Trump prepares to enter his second term in office, market analysts are keeping a close eye on key trends and potential shifts that could shape the economic landscape in the years ahead.
Jay Woods, chief global strategist at Freedom Capital Markets and long-time fixture at the New York Stock Exchange since beginning his trading career in 1992, joins Stocks in Translation. Speaking from the heart of global financial markets, Woods shares his insights with host Jared Blikre, Yahoo Finance’s markets and data editor, and producer Sydnee Fried.
In this episode, the discussion kicks off with market breadth, which Blikre defines as “how many stocks are participating in [the] market’s move.” While this measure is top of mind for many, Woods reassures passive investors to stay focused on the bigger picture.
“As a passive investor, you don't [want to] look and hear about the breadth and the little swings in the market from day to day,” Woods explains. “You want to just continue to buy quality names over a long period of time. A well-balanced portfolio is what a passive investor should be looking at all the time and not look at these gyrations and worry about the breadth from day to day.”
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The conversation then transitions to what Blikre refers to as the "Trump trade 2.0,” as President-elect Donald Trump prepares to take office again on January 20th. Reflecting on Trump’s first term, Woods highlights that 2017 was “the least volatile stock market we’ve seen,” noting, “We didn’t have a 2% correction in a day at any point during 2017.” However, Woods warns that this time may be different, recalling that tariffs disrupted market momentum in 2018 and could pose similar challenges during Trump’s second term.
“So [when] you talk about the Trump trade, we are worried about two things: tariffs, which is what's going to hurt the inflation narrative at the Fed, and unemployment,” Woods says. He cautions that if both inflation and unemployment rise, the Federal Reserve may be forced to raise interest rates.
“It was tariffs that derailed us in January [and] February of 2018. I think we're more in a scenario like that right now than we were in the beginning of Trump 1.0,” Woods adds.
On a brighter note, Woods points to potential opportunities in the cryptocurrency market, citing the post-election rally that saw bitcoin (BTC-USD) surge from $27,000 to roughly $100,000.
“The Trump administration is a crypto-friendly administration,” Woods notes. “You have a Secretary of the Treasury that supports crypto, an SEC chairman that supports crypto. So these crypto-related stocks are going to continue to get a boost… And I anticipate we'll get back and stay above the $100,000 threshold in crypto in the first year of the Trump administration.”