By Stuart Katz, Chief Investment Officer
January 27, 2025 –

Last week’s inauguration activities in Washington mark Donald Trump’s return to the White House. As the second Trump administration starts, the market is looking ahead to what changes may take place in the coming years. Today, we briefly examine five key themes investors are monitoring as the political backdrop shifts in Washington. Before we dive in, it’s important to emphasize that policy changes often take time to materialize. Politicians make many promises during election years, and the government’s system of checks and balances can delay their implementation or cause them to remain unfulfilled. It’s important to recognize that the market could remain volatile as we await details about the administration’s policy agenda, with a steady stream of news headlines shaping sentiment.
1. Optimism Over Deregulation and Tax Cuts: There’s a sense of optimism among investors, with the administration expected to focus on deregulation and extending the tax cuts from the first Trump administration. These changes are seen as creating a more business-friendly environment, which could boost U.S. corporate profits and extend the stock market’s recent gains. Sectors such as finance, energy, and manufacturing are viewed as the most likely beneficiaries of these potential policy shifts.
2. Concerns About Global Tariffs and Trade Wars: Investors are concerned about the reintroduction or escalation of tariffs. Given Donald Trump’s history with trade policies, there is concern that trade disputes could resurface. This could negatively impact stocks and lead to slower economic growth by disrupting global trade, increasing costs for businesses, and contributing to inflation. However, if negotiations take place and agreements are reached quickly, investors’ worst fears may be overblown, an outcome that would be a positive development for the market.
3. Market Volatility and Policy Uncertainty: As with all new administrations, Donald Trump’s return to office has brought about renewed policy uncertainty and the potential for heightened market volatility in the near term. Markets and the Fed are monitoring his early actions and executive orders to understand the ultimate direction of his administration’s policies. Given the headline-driven volatility in the first Trump administration, there is an expectation for increased volatility early in his second term, with a continual flow of news headlines driving sentiment until actual details emerge.
4. Bitcoin and Crypto Markets: Donald Trump’s evolving views and campaign comments on cryptocurrencies led to a post-election rally in Bitcoin and other crypto assets. Some investors interpret his comments and policy proposals as favorable for digital currencies, particularly his embrace of cryptocurrency during the campaign. In addition, the SEC recently established a “crypto task force” aimed at developing a regulatory framework for crypto assets. There is
optimism about the potential for technological innovation with cryptocurrencies; however, speculation and sentiment shifts continue to largely dominate crypto markets, a trend that could continue in 2025.
5. Market Sentiment: The overall sentiment is characterized by cautious optimism. Investors are weighing potential benefits like tax reform and deregulation against risks such as inflation, trade tensions, and policy uncertainty. Markets are largely adopting an optimistic approach to earnings season, but highly sensitive to news headlines that may challenge the AI momentum narrative given elevated valuation multiples. The mixed early reaction highlights the complex and wide-ranging impact of Trump’s policies on the stock market, with investors preparing for both opportunities and challenges ahead.
Disclosures
Investment Commentary Sources: Bloomberg. Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security, has not been tailored to the needs of any specific investor, and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any Investment decisions. The information contained herein was carefully compiled from sources believed to be reliable, but Robertson Stephens cannot guarantee its accuracy or completeness. Information, views and opinions are current as of the date of this presentation, are based on the information available at the time, and are subject to change based on market and other conditions. Robertson Stephens assumes no duty to update this information. Unless otherwise noted, any individual opinions presented are those of the author and not necessarily those of Robertson Stephens. Indices are unmanaged and reflect the reinvestment of all income or dividends but do not reflect the deduction of any fees or expenses which would reduce returns. Past performance does not guarantee future results. Forward-looking performance targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are only available to qualified investors and are not suitable for all investors. Alternative investments include risks such as illiquidity, long time horizons, reduced transparency, and significant loss of principal. This material is an investment advisory publication intended for investment advisory clients and prospective clients only. Robertson Stephens only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Robertson Stephens’ current written disclosure brochure filed with the SEC which discusses, among other things, Robertson Stephens’ business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. © 2025 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere.