StoneX’s Rooney-Vera Weighs Market Optimism Post Election Results
Key takeaways
- Benchmark stock indices sees pullback after record highs
- Optimism up despite deficit increase concerns
- Industrials and defense sectors may benefit
StoneX’s Chief Market Strategist Kathryn Rooney-Vera joined CNBC to offer her insights into the stock market’s pullback after hitting record highs in the wake of the election results. She also weighed in on concerns around the U.S. deficit and implications of expected tax cuts. When asked if the pullback is a sign of the market cooling off, Rooney-Vera said that was too early to attribute a systemic shift; but while optimism is “very high,” she remains guarded.
“How sustainable is optimism given the possibility of a turbocharge of the U.S. economy, which should fuel optimism … but could very well take the deficit much higher, which … a lot of us are concerned about,” Rooney-Vera said.
When asked, Rooney-Vera said “optimism” was her ‘word of the day.’ “I think that’s what its all about. We have small business optimism coming out this morning, and I think that’s going to be clutch going forward.” Expectations for a turbocharge of the U.S. economy with a Republican sweep she said, “[s]ounds great but really depends on what happens with the fiscal deficit and reinflation. The big issue … is going to be how much deficit reduction can be done if corporate taxes and individual taxes are going to be reduced so drastically.”
As bond yields show signs of cooling in anticipation of President Trump cuting spending, Rooney-Vera was asked to gauge her optimism that bond yields will stay low and not become an impediment to equity.
“I think the scenario is positive if, in fact, there is a form of deficit reduction to the tune of even close to the 30% that the administration is talking about with Elon Musk.” Rooney-Vera said such an outcome could benefit steepeners – reference to a popular interest rate swap position.
Further, Rooney-Vera said she would follow the industrials and defense to see whether they are the sectors that may benefit the most. “I think those are traditional Trump trades.”
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