From Election Uncertainty To Policy Uncertainty

The NFIB survey of small business owners was released today showing a record high in their uncertainty index during October (chart). That's not surprising since the polls showed that the presidential race was too close to call, raising the prospect of a contested election. The same happened prior to the previous two elections. The uncertainty index will undoubtedly fall when November's survey is released. However, it may stay relatively elevated because Donald Trump's victory now raises lots of uncertainties about his policies. His clean sweep doesn't leave much doubt that he will get the legislation he wants out of Congress.

The stock market rallied to new record highs after Trump won because stock investors accentuated the positives of tax cuts and deregulation. They might also be expecting speedier resolutions of current geopolitical crises, which explains why the price of gold has been weak. Before the election, we expected the Nasdaq to rise to 20,000 by mid-2025. It may get there by yearend (chart). On Sunday, we raised our S&P 500 targets to 6100 by the end of this year and 7000 by the end of next year.