Pelli: The outcome of the U.S. presidential election will clarify policies and help boost investors' risk preferences.

Republican candidate Trump won the US presidential election. Experts at PwC Investment commented that Trump's election as president is likely to continue his focus on several policy issues from his first term. The potential revenue generated by the US government through increased tariffs may be included in budget discussions. At the same time, major tax cuts implemented by Trump in his first term are set to expire, and the biggest challenge will be how Trump and Congress will respond. Tim Murray, the chief capital market strategist at the Multi-Asset Department, stated that the announcement of the US presidential election results is expected to eliminate a major uncertainty factor affecting the market and economy, potentially boosting investor risk appetite. Gil Fortgang, deputy analyst in the US Stock Department in Washington, pointed out that extending the Tax Cuts and Jobs Act by lowering personal marginal income tax rates and providing tax incentives for businesses can prevent one of the largest nominal tax hikes in US history. However, this will increase additional deficit spending by $4 to $5 trillion over the next decade. The president may face pressure to fund the continuation of the 2017 tax cuts and any new tax cuts, which could bring potential policy risks to certain industries and sectors. The potential revenue generated by the US government through increased tariffs may be included in budget discussions. Trump has proposed imposing a 10% border tax on all foreign goods entering the US, as well as imposing up to 60% tariffs on goods imported from China. Setting aside specific numbers, these statements suggest that Trump may take a radical stance on trade policy that could impact beyond China. Chief US economist Blerina Uruci mentioned that increasing existing tariffs and/or imposing additional tariffs on imports could cause a one-time price shock on inflation. The extent of impact will depend on businesses' ability to pass on these costs to consumers, which is difficult to predict. Another area to watch is the new president's stance on tightening immigration policy. Taking a tough stance on this could have a negative impact on labor supply and further tighten the US labor market. Unlike increased tariffs, this situation may have a more lasting impact on prices. In the stock market, US small-cap stocks may benefit from Trump's victory, especially if his administration relaxes regulations and takes a more lenient stance on mergers and acquisitions. Small businesses have been cautious leading up to the election, so policy clarity may prompt these companies to rebuild inventory and increase business spending. The possibility of further corporate tax cuts and the Fed's easing of monetary policy will also be positive factors. The potential impact of Trump's trade and immigration policies on inflation is worth closely monitoring for investors in the midterm. Higher inflation expectations could further push up bond yields and affect stock valuations based on companies' future cash flows. Trade tensions may also lead to volatility in affected industries and markets. The outlook for the US dollar is uncertain. While Trump has expressed a desire for a weaker dollar, some of his policies, such as increased tariffs, may lead to a stronger dollar. However, other factors such as the Fed's inclination to ease policy and the relative performance of the US economy compared to other global economies will also have an impact.