The U.S. will be heading back to the "Age of Trump" as Donald Trump has been declared the winner of the 2024 U.S. Presidential election. The result, in one of the most intense and contentious U.S. presidential election campaign seasons, finally came to a close and surprised some as Kamala Harris had strong momentum during much of her candidacy. But, as we have seen in the past, "it isn't over till it's over", and Trump will be in the Oval Office once again.

The big question for investors is, how will the next four years of Trump potentially impact the markets?

What does it mean for markets?
A Trump Presidency will likely result in an isolationist America First stance that could be more extreme than his first term as President, without the previous cohort of relatively more moderate advisors. The previous Trump administration spent years slapping tariffs on Chinese goods and targeted Canada, Europe and other American allies. He would look to possibly expand on these tariffs. For U.S. consumers, a 60% tariff on Chinese imports and a 10% universal import tariff on other imported products being proposed by Trump will be a major hit for lower income households. It is also inflationary and could reduce real Gross Domestic Product (GDP) by up to 2% (if fully implemented).

Trump also plans to cut the corporate income tax rate to as low as 15%. That alone could mean a double-digit percentage-point upward swing in S&P 500 Index earnings. Additionally, beyond preserving existing tax policy, Trump proposes to eliminate taxes on Social Security benefits at a cost of $1.2 trillion.

Does Trump's pro-business, 'America first' agenda and low tax proposals bode better for higher stock valuations? From a general standpoint, equity markets would be buoyed by lower taxes and lighter regulation. However, once Trump’s more Wall Street-friendly policies are partially offset by concerns about the costs and inflation impacts of higher tariffs and trade wars, the net impact may only be slightly positive. Combined with possible trade tensions and deportations of unauthorized immigrants, Trump’s policies may end up being an outright drag on GDP.
 

TD Wealth Asset Allocation Committee (WAAC) Perspective
Our investment teams don't believe that positioning portfolios based on election outcomes is a sustainable investment approach. That is not to say we don't monitor the potential implications of policy changes on economic growth, capital markets and the impact on companies. Ultimately, our goal is to ensure we are allocated to companies with strong earnings visibility, sustainable free cash flows and quality management teams. We believe these factors ultimately drive outperformance well beyond the election.

Within our investment mandates, our portfolio managers have been carefully assessing the many risks on the horizon, including potential effects from the outcome of the U.S. election. They have sought to position their portfolios to minimize potential negative impacts while also seeking long term opportunities to benefit from attractive valuations and possible market overreactions. They will continue to monitor and evaluate the risks and rewards around the globe and to assess conditions with the objectives and best interests of our clients in mind.

Election result implications for investors
For investors, a prudent plan and a long-term diversified allocation across asset classes and geographies, with a focus on evolving economic data, and how this data could shape market performance, is more important than the election result. In addition, policy itself is only part of the overall investment mosaic. Company fundamentals, idiosyncratic business models, and the growth/inflation trajectory are likely to matter much more in terms of long-term performance, than individual elections.

<sub>For Canadian institutional investment professionals only. Not for further distribution.
The information contained herein is for information purposes only. The information has been drawn from sources believed to be reliable. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.

This material is not an offer to any person in any jurisdiction where unlawful or unauthorized. These materials have not been reviewed by and are not registered with any securities or other regulatory authority in jurisdictions where we operate.
Any general discussion or opinions contained within these materials regarding securities or market conditions represent our view or the view of the source cited. Unless otherwise indicated, such view is as of the date noted and is subject to change. Information about the portfolio holdings, asset allocation or diversification is historical and is subject to change.

This document may contain forward-looking statements (“FLS”). FLS reflect current expectations and projections about future events and/or outcomes based on data currently available. Such expectations and projections may be incorrect in the future as events which were not anticipated or considered in their formulation may occur and lead to results that differ materially from those expressed or implied. FLS are not guarantees of future performance and reliance on FLS should be avoided. Any projections, targets, or estimates in this presentation are forward-looking statements and are based on our internal research, analysis, and assumptions. There can be no assurances that such projections, targets, or estimates will occur and the actual results may be materially different. Additional information about our assumptions is available upon request. Other events which were not taken into account in formulating such projections, targets, or estimates may occur and may significantly affect the returns or performance.

The TD Wealth Asset Allocation Committee (“WAAC”) is comprised of a diverse group of TD investment professionals. The WAAC’s mandate is to issue quarterly market outlooks which provide its concise view of the upcoming market situation for the next six to eighteen months. The WAAC’s guidance is not a guarantee of future results and actual market events may differ materially from those set out expressly or by implication in the WAAC’s quarterly market outlook. The WAAC market outlook is not a substitute for investment advice.
TD Global Investment Solutions represents TD Asset Management Inc. ("TDAM") and Epoch Investment Partners, Inc. ("TD Epoch"). TDAM and TD Epoch are affiliates and wholly-owned subsidiaries of The Toronto-Dominion Bank.

® The TD logo and other TD trademarks are the property of The Toronto-Dominion Bank or its subsidiaries.</sub>