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What We Learned This Week

Trump Trade in Play: With the election results in, we can begin to identify some likely winners and losers in the stock market, at least in the short term, based on Trump’s past policy positions and approach to both domestic and foreign issues. The most recognizable winner at the moment is Tesla, whose stock surged as Elon Musk actively supported Trump in the closing weeks of the campaign. This has fueled speculation that Tesla could benefit under the new administration, with potential regulatory breaks or even a role for Musk as an advisor. While this may hold some truth, it also feels a bit hype-driven at this stage. Other beneficiaries might include big tech companies like Alphabet, Amazon, and Apple, as the incoming antitrust leadership could provide some relief—though Apple’s heavy reliance on Chinese manufacturing remains a wildcard. Cryptocurrency also saw a rally to all-time highs, as Trump’s camp has shown favorable views toward digital currencies.

 

On the losing side, renewable energy stocks like wind and solar companies will likely face headwinds, as Trump has been a vocal critic of these technologies, favoring increased domestic oil production instead. Additionally, companies with significant exposure to China (and possibly Mexico) could be impacted by renewed trade tensions and potential tariffs. It’s important to remember, however, that these are preliminary observations based on campaign rhetoric and Trump’s first-term actions. Much of this sentiment is speculative and may be largely priced in, so it’s worth being cautious before rushing to chase any of these themes.

 

Sharpies Coming back to Starbucks: New Starbucks CEO Brian Niccol held his first call with analysts, outlining a high-level vision for the company’s turnaround. The former Chipotle CEO has spent his first weeks at Starbucks traveling to stores, engaging with employees and customers to gain insight into the current state of the brand and what needs to change. Central to Niccol’s strategy is a return to Starbucks as a “third place”—not just a spot to pick up coffee, but a place to relax and spend time. This approach addresses recent criticisms of the brand, which had focused heavily on speed and efficiency through online ordering and drive-thrus. Ironically, these changes often led to customer frustrations with longer wait times and disorganization as stores juggled in-store and mobile orders. Niccol aims to shift this by warming up the café atmosphere, reintroducing comfortable seating, bringing back ceramic mugs for in-store customers, and even reintroducing hand-written names on orders.

 

Beyond enhancing the café experience, he plans to simplify the menu for quality and efficiency, adjust pricing to emphasize value, and streamline the mobile app for easier navigation. We’re encouraged by this approach, especially since Niccol’s success at Chipotle was largely driven by a focus on speed and efficiency. Starbucks’ brand value remains strong, and this refresh feels both feasible and promising.

 

Interest Rates Jump Post-Election: Housing-related stocks took a hit this week following Trump’s victory, as interest rates climbed higher. Shares of major homebuilders like D.R. Horton and Lennar, along with housing retailers like Home Depot and Lowe's, are particularly sensitive to rate changes since borrowing costs influence people’s willingness to buy homes or take on large-scale renovations. The recent rise in rates largely stems from bond selling, though the motivations behind this are mixed. Rates had already been trending upward as Trump’s win looked more probable, and the post-election surge in equities suggests investors are rotating out of bonds in favor of growth assets.

 

Inflation expectations may also be at play, with investors weighing potential impacts from Trump’s trade and tariff policies. It’s likely a bit of both, but the steep drop in housing stocks seems more of a technical reaction than a true reflection of business fundamentals. While prolonged high rates could indeed curb sales, it’s too early to make that call definitively.

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