Donald Trump has won the presidential election. Republicans will take control of the Senate and appear more likely than not to retain control of the House (although an official call for the House will likely be delayed).

We expect tariffs and tax policy to be the focus for economic policy early in a second Trump administration. Tariffs are likely inflationary and negative for growth.

We now expect just one Fed cut in 2025, with policy on hold until the inflation shock from tariffs has passed. We expect some additional easing in 2026 but have raised our terminal rate forecast to 3.625% from 3.125%. An eventual change in Fed leadership is likely by 2026, but it will be difficult for Trump to significantly impact monetary policy.

The fiscal outlook will likely deteriorate under a unified government. We expect higher debt and deficits than current CBO projections. However, tariffs can raise significant front-loaded revenue.

Oct jobs report sealed the deal for a Nov cut

We expect the Fed to cut rates by 25bp at its November meeting. Even accounting for hurricane and strike distortions, we believe the Oct jobs report was soft enough to essentially seal the deal for a cut later this week and significantly increase the chances of another 25bp cut in Dec. The FOMC statement should be little changed.

Powell: still optimistic, still data dependent

We also don’t expect much change in Chair Powell’s message. He is likely to reiterate that i) the economy remains on firm footing, ii) the risks to the Fed’s dual mandate are balanced, and iii) the FOMC still feels inflation is heading back toward the 2% target. We expect Powell to emphasize data dependence once again and provide little forward guidance on the December decision or the 2025 policy path.

“No comment” on the election

Powell is likely to get questions about the election, especially if the outcome is known by the time of the meeting. He will probably highlight that the Fed will stay in its lane and react to incoming data instead of commenting on the next administration’s policy agenda.

Looser fiscal = tighter monetary policy

The elections will have far greater consequences for the path of Fed policy than anything Chair Powell says in his press conference, in our view. All else equal, we think further fiscal expansion means a higher terminal Fed funds rate.

Tariffs: once bitten, twice shy

The Fed’s response function to tariffs is harder to pin down. Some argue they will look through the inflationary impact of tariffs as a one-off price level adjustment and focus on the negative growth consequences. However, the Fed erred in 2021 by assuming supply shocks would have a “transitory” impact on inflation. Therefore, all else equal, policymakers could err on the side of caution by pausing the cutting cycle if large tariff increases are announced.

S&P 500 (SP): 30.08

Nasdaq (NQ): 118.89

Dow Jones (Dow): 159.22

NYSE Breadth: 68% Upside Volume

Nasdaq Breadth: 64% Upside Volume

Total Breadth: 66% Upside Volume

NYSE Advance/Decline: 61% Advance

Nasdaq Advance/Decline: 63% Advance

Total Advance/Decline: 62% Advance

NYSE New Highs/New Lows: 474 / 52

Nasdaq New Highs/New Lows: 667 / 157

NYSE TRIN: 0.82

Nasdaq TRIN: 1.01

NYSE Breadth: 43% Upside Volume

Nasdaq Breadth: 52% Upside Volume

Total Breadth: 49% Upside Volume

NYSE Advance/Decline: 36% Advance

Nasdaq Advance/Decline: 40% Advance

Total Advance/Decline: 38% Advance

NYSE New Highs/New Lows: 270 / 134

Nasdaq New Highs/New Lows: 370 / 353

NYSE TRIN: 1.01

Nasdaq TRIN: 0.95

VIX: ~15.7 (down)

Early trades focused on the opening range. PTGDavid initiated a long position in crude oil (CL), successfully hitting all targets, which provided a strong start. A long position in the Nasdaq (NQ) initially showed promise but was stopped out with a -1R loss.

Attention shifted to key levels like the 24-hour VWAP zone (5900-5905) as a buying response area and the 5920-5935 zones for resistance and potential short probes, helping traders identify reliable pivots.

PTGDavid shared chart screenshots to illustrate trade setups and to enhance learning.

A “sandbox” consolidation zone (5910-5930) emerged, allowing for two-way trades within this range. The afternoon transitioned to a consolidation phase before pushing to new all-time highs, signaling bullish strength continuing through the close.

The Market-On-Close (MOC) imbalances showcased high volatility: a $759M buy imbalance flipped to a $1 billion sell, and finally to a $1.5 billion buy. PTGDavid described these as “market-on-close games,” capturing the erratic end-of-day action as imbalances were absorbed, emphasizing the importance of staying alert to MOC flows.

The day showcased the importance of trading in alignment with dominant forces, especially during volatile cycles.

Successful identification of support and resistance zones, like the 24-hour VWAP zone, provided structure for trades.

The active MOC period underscored the necessity of adapting to rapid shifts and understanding institutional buy/sell imbalances as they impact end-of-day liquidity.

Market Movement: Despite positive earnings from Alphabet (GOOG, GOOGL), major indices dipped Wednesday with the Dow down 0.2%.

Gold Surge: Gold continues its upward momentum, reaching record highs.

Economic Data Focus: Key reports are due this morning at 8:30 a.m. ET, including the PCE Price Index, Employment Cost Index, and Unemployment claims. The monthly jobs report will be released on Friday.

Corporate Earnings:

• Positive Reports: Microsoft (MSFT) and Meta (META) exceeded earnings estimates. However, Meta’s future spending plans raise some caution.

• Notable Stock Movements: Super Micro Computer (SMCI) dropped over 35% amid recent filings.

• Premarket Earnings: Companies reporting include Mastercard (MA), Stellantis (STLA), and Uber (UBER).

• Aftermarket Earnings: Major reports expected from Amazon (AMZN), Apple (AAPL), and Intel (INTC).

Market Metrics: Volatility softened with ES’s 5-day average daily range around 50 points, while a bearish “whale” bias is noted ahead of the morning’s economic data releases.

Technical Levels: The ES is nearing its uptrend channel bottom at 5767/70s, with its 50-day moving average around 5757.