According to China Finance News on November 25th (Editor: Huang Junzhi), as President-elect Donald Trump will begin his second term in January next year, the market is "half happy, half worried" about his economic agenda presented during the election process. However, some analysts believe that the US stock market will be a key constraint for his final decisions.

Due to the complete control of Congress by the Republican Party after this election, Trump's ability to formulate new policies has greatly strengthened. He has been exerting pressure on legislators to align with his agenda. These congressmen seem enthusiastic about cooperating.

Therefore, analysts believe that the market may be an important means to balance Trump's control over Washington. Based on his previous presidential term, he will remain cautious and sensitive to negative market reactions to his policies. For example, in Trump's first term, he liked to view the US stock market as a real-time indicator of his performance and took credit for the rise in US stocks.

Mark Malek, Chief Investment Officer of financial services company Siebert, pointed out that Trump "has shown strong interest in the performance of the US stock market, using it as a 'scorecard' for the success of his government."

He further explained, "Perhaps the best example happened on March 13, 2020". Trump sent Fox News late host Lou Dobbs a hand-signed Yahoo Finance Dow Jones Industrial Average chart. After Trump declared a national emergency due to the COVID-19 pandemic, the index soared nearly 2,000 points on that day.

This event illustrates how Trump views the relationship between the market and presidential performance. Observers suggest that if he announces or enacts policies that significantly cause a drop in US stocks, he may adjust his approach.

Yardeni Research strategist Eric Wallerstein also believes this, stating that policies that increase the fiscal deficit and cause bond investors to panic may prompt the government to reconsider.

"Yields will soar, and the US stock market will react unfavorably to this, then he may change course," he added.

This view is also consistent with Jeremy Siegel's. The Wharton School professor pointed out shortly after the election that the president-elect may proceed cautiously on market-related issues.

"Both the bond market and the stock market will be significant constraints on many of Trump's plans," he said.

Given some of Trump's campaign promises, such as massive deportations of immigrants and imposing widespread tariffs of 10-20% on imported commodities, stock market investors may feel discouraged. These are the most concerning issues for investors next year. Economists have frequently warned that these proposals could reignite inflation and limit the Fed's ability to continue cutting rates.

Sonu Varghese, global macro strategist at the Carson Group, said, "The market's response to a sharp increase in tariffs may be quite negative. President Trump may see the US stock market as his report card, so the market's negative reaction may prompt some moderation in his proposals."

On the other hand, Trump cares so much about the performance of the US stock market, some analysts believe it may be because market fluctuations could affect his own wealth. According to media estimates, his net worth is around $6 billion, so there are reasons to believe that a portion of his wealth is sensitive to market trends. This financial risk may further urge him to steer clear of policies that could disrupt market stability.

Therefore, analysts believe that if Trump ultimately wants to see the US stock market rise during his presidency, his campaign promises of extensive tariffs and mass deportations of immigrants may have to be toned down to avoid collateral damage.

"I think any president would want to implement policies favorable to the market," Wallerstein said.

Editor/ping