Expectations for Trump’s Policies

Investing.com — Expectations for President-elect Donald Trump to roll out expansionary fiscal policies and extend U.S. economic exceptionalism have kept stocks on the rise. However, Piper Sandler expresses skepticism, believing Trump’s narrow win and thin Republican margins in Congress will complicate efforts to pass major legislation, including corporate tax cuts.

Analysts' Viewpoint

"Trump is an unpopular, lame duck president who won a narrow election against a weak opponent and has thin margins in Congress. Investors should not get carried away with what he can move through Congress," analysts at Piper Sandler said.

Trump's comeback victory, although remarkable, mirrors narrow election wins of past presidents like George W. Bush and Barack Obama.

• Bush won 50.7% to John Kerry’s 48.3%, securing 286 electoral votes in 2004.
• Obama won 51.0% to Mitt Romney’s 47.2% in 2012 and garnered 332 electoral votes.

Currently, Trump holds 50.8% of the vote to Harris’ 47.5%, but this lead may diminish as more votes are counted in California.

Caution Against Optimism

Despite Trump’s notable victory, Piper Sandler’s analysts warned investors against overly optimistic conclusions. Republican control of the House is likely to remain, but the margin is expected to be very slim.

"A slim majority in the House presents significant challenges to moving major legislation,” they added. “As seen in the past two years, such a majority poses difficulties for GOP leadership."

Senate Dynamics

In the Senate, where Republicans regained control after winning three seats, the analysts noted that almost all initiatives will require 60 votes.

“We remain skeptical that there will be a major tax cut or expansionary fiscal policy. A cut in the corporate tax rate is highly unlikely,” said Piper Sandler.

Opportunities Ahead

Nonetheless, there are numerous actions Trump can undertake without Congressional approval that may be positively received by markets. This includes extending the 2017 tax cuts, advancing his tariff plans, and addressing illegal immigration issues.