On January 20,2025, this country will inaugurate a new and previous President. This inauguration represents a change in political power in the Executive Branch. How much impact will this transition of power affect the Stock Market? Historically, the U.S. Stock Market tends to struggle a short time after inauguration day. Since the DOW Jones was created in 1896, one of its worst quarterly returns has been the first three months of a President’s term in office , producing an average return of 0.2%. This compares to an average return of 1.9% in the other quarters of the Presidential term. This pattern has been consistent whether or not the incumbent political party won or lost. In Donald Trump’s first presidency, the S&P 500 performed very well. Specifically, the S&P advanced 70% during Trump’s first term, this equates to 14.1% annually. Some analysts are anticipating strong returns in his second term driven by deregulation and tax cuts. In fact, since the creation of the S&P 500 in 1957, the index performed better under President Trump than any other president except Bill Clinton. It is important to remember that presidents do not control the stock market. However, they can influence it by shaping policies that impact the economy. As Trump prepares to be sworn in as the 47th president of the United States, he is set to inherit a strong economy, characterized by robust growth opportunities, low unemployment, and positive financial markets. The agenda of a second Trump administration could have a stimulating effect on the U.S. economy in 2025 and into 2026. Many experts making stock market forecasts for 2025 are convinced that stocks should enjoy not only a rally, but broad-based prosperity. Sameer Samana, a global market strategist at Wells Fargo Investment Institute, noted the importance of the Republicans capturing not only the White House, but the Senate and House of Representatives as well. According to Samana, this red sweep means “more cohesion,” supporting a strong stock market forecast for the coming year. Tickers to consider: IKT , KALA , EVAX , JTAI Sylva Disclaimer: https://www.sylvacap.com/disclaimer

The November election gave the Republicans control of two of the three branches of government. Former President Donald Trump’s victory over Vice President Kamala Harris gave the Republicans control of the Executive Branch and by winning a majority in both the House of Representatives and the Senate, they now have control over the Legislative Branch as well. What will this “Red Sweep” mean for the economy? With former President Donald Trump regaining control of the White House and having majority support in both the House and the Senate, it is more than likely that President Elect Trump’s economic campaign promises will come to fruition. Trump has proposed increasing Federal revenue by imposing tariffs on goods made in foreign countries. He plans on imposing a 60% tariff on all goods made in China and a 10-20% tariff on all goods made in other countries. While some feel that this will hurt US competitiveness, others believe it will encourage the US to manufacture its own goods on our own soil. Leading to another Trump incentive, his proposal to lower the Corporate Tax rate from 21% to 15% for any companies producing goods in the US. Trump has also pledged to renew most of the provisions of the 2017 Tax Cut Job Act (TCJA) , which is set to expire in 2025. He plans on making these provisions permanent, including a higher level for personal standard deductions and lower taxes in most brackets. Trump has proposed several new targeted tax breaks, including an exemption on taxes on both overtime and tipped income. The former president has also proposed excluding Social Security payments from income taxes. He has also proposed expanding the Child Tax Credit from $2000 to $5000.00. President-elect Trump has argued for broad deregulation, which has been supported by the Supreme Court’s decision to repeal the Chevron Doctrine . By overturning Chevron the powers of regulatory agencies have become extremely limited if not potentially non-existent. Big Tech may see mixed impacts from de-regulatory policies, and energy companies stand to benefit most from looser regulations. Additionally, the perception of less anti-trust enforcement could boost corporate Mergers and Acquisitions (M&A) moving forward. In response to the election, Equity markets have rallied strongly, the Treasury yields and the U.S. dollar have surged. Greater policy change under a “sweep” could affect economic growth, inflation and market performance. Time will tell in the months to come how much an effect this sweep will have. Tickers to consider: IKT , KALA , EVAX , JTAI Sylva Disclaimer: https://www.sylvacap.com/disclaimer

The United States will elect a new President on November 5, 2024. This is set to be one of the most important economic and political events in recent history. The outcome of this election will have a major impact on the US economy, and will determine the direction that the US will be traveling toward for the future. The trajectory of the US economy looks very different under each candidate. What will a Trump victory mean for the economy? Former President Trump has made a series of promises to help revitalize the US economy. These promises include changes in the trade policies, eliminating taxes on tips and Social Security benefits, and a proposal to reduce the corporate tax rate. President Trump is confident that these measures will help in restoring employment opportunities, and also cool down inflation. Trump plans to impose a universal tariff of 10%-20% on all imports and as high as 60% on goods from China. He emphasizes that imposing tariffs will protect jobs of Americans and industry workers as this will encourage domestic production and reduce reliance on foreign goods. Trump believes that the tariffs would be absorbed by foreign producers; therefore the rising costs would not affect Americans. Trump also plans to bring back all of the tax cuts that he signed in 2017, and further reduce taxes for individuals and corporations. His proposal includes elimination of taxes on Social Security benefits and also tips. Trump also believes that lowering the corporate tax rate from 21% to 15% would produce more jobs and spur economic growth. Trump also supports strengthening our borders and a mass deportation for undocumented immigrants. This would increase jobs for documented immigrants or Americans, and decrease the country’s financial burden for providing for undocumented immigrants. Undocumented immigrants consume the benefits of living in the United States (healthcare, education, etc.), but do not contribute fiscally (through taxes) for the services that they use. How will the economy be affected if Harris wins the election? Vice President Kamala Harris has been in office for the past four years. During her time in office, inflation has been out of control. The cost of living has significantly increased since Harris has been VP. Over the past four years, grocery prices have increased by 22%, utilities have increased by 28% and the price of new homes have increased by 28%. In a speech she gave in Washington this past week, the Vice President focused on the challenges facing Americans, including high prices for food, housing and childcare. She stated, “I get it.” What she failed to address is that these price increases occurred on “The Biden Watch,” which technically implies “her watch.” Vice President Harris has indicated that she would like to see the corporate tax rate return to 35%. This would mean continued higher costs for corporations and small businesses that are categorized as a corporation (Limited Liability Corporations, S- Corps, and C-Corps). This high tax rate would cause the owners of said companies (whether large or small) to pass their costs onto their consumers. This would probably result in the companies charging more for goods and services that they provide. Ultimately keep prices higher for the average consumer. The Vice President has also promised to keep a Biden promise that those earning less than $400,000.00/ year would be spared any higher taxes. However, she does have a record of favoring steeper taxes, not only for businesses, but also for individuals. She would have to find the money to pay for the expanded social programs that she is focusing on, such as affordable housing , paid leave, and childcare support. It is highly likely that the money for those programs will have to come from tax increases, unless she knows of some buried treasure somewhere. The Vice President has not addressed her thoughts on tariffs. So it is uncertain how she will proceed regarding trade tariffs. Harris does support Biden’s commitment to renewable energy. However, renewable energy investments require more upfront costs. Again, it is unclear where that money will come from. With regards to high grocery prices, Harris has proposed a plan for a federal ban on grocery price gouging during national emergencies . This may help to manage food costs during a time of crisis, but will probably have little impact on prices outside of emergencies. Harris supports current immigration laws and does not support mass deportations. She has signaled support for enhanced border security, but fails to have policies that will strengthen the border. Trump’s policies are very aggressive and bold. While his policies may not be palatable with everyone, he believes that his policies prioritize American industry and independence. Kamala Harris, in turn, is coming from a more passive role as vice president. She plans to build on Biden-era policies with a focus on sustainability and middle-class support. Yet, Harris has still not proposed any tangible actions on her plans, leaving many economists concerned about the viability of her plans. Tickers to consider: IKT, KALA, EVAX Sylva Disclaimer: https://www.sylvacap.com/disclaimer

On September 18, 2024, the Federal Reserve [Fed] cut the Federal Fund Rate by 0.50 percentage points. This is the first rate cut since the Fed began raising interest rates in March 2022. Most economists were surprised by the aggressive rate cut, which was double the typical 0.25 percentage point cut. Fed chairman, Jerome Powell, stated that the reason for the aggressive rate cut was because, “The U.S. economy is in a good place…and our decision today is designed to keep it there.” Here are a few takeaways we can reflect on regarding this decision by the Fed. First and foremost, Powell’s statement that the U.S. economy is in a good place is controversial. Most Americans would not agree with this statement. Basic living costs such as groceries, gasoline, housing prices, rent, etc, are still very high. The majority of Americans are living paycheck to paycheck just to survive and often cannot afford simple luxuries such as eating out at restaurants or going to the movies. While the Fed rate cut could help improve mortgage interest rates, most people still cannot afford to buy a new or used house due to the still inflated prices of homes. The Federal Fund Rate is just one factor of many that affect the housing market. There are many issues beyond the Fed’s control that impact the housing market, such as lack of supply. Lack of supply and greater demand just causes the price of homes to remain high. So the Fed’s decision to aggressively cut the rate by .5 percentage point in order to keep the economy where it is today , may not have been the best decision for most Americans. The Federal Reserve's decision to cut this month was also influenced by data from the labor market. In July, the Labor Department issued a data revision showing that the U.S. actually added 818,000 fewer jobs f rom March 2023-March 2024, than originally reported. What this means is that the U.S. job market was not as strong as it originally appeared. This sparked concerns the U.S. economy could be cracking under the highest interest rates in 23 years. Nationwide senior economist Ben Ayers was predicting a rate cut of 0.25 percentage points. He stated,"Calls for a larger, 50 bps decline will become louder if the August jobs report comes in weaker than expected and there are more signs of businesses retrenching," The 0.5 percentage point drop further confirms that the U.S. economy may not be currently in a “good place” as Powell suggests. Powell has repeatedly stated that he and his colleagues are not swayed by partisan politics. However, the timing of the Fed's move is politically sensitive. This rate cut comes less than seven weeks before a presidential election. The strength of the economy is always a key issue for voters. If the economy is strong, Americans usually like to keep things status quo. If the economy is not doing well, Americans tend to vote for a change in the system. Avoiding a recession at all costs seems to be a motivating factor for the Fed’s aggressive rate cut, especially coming into an election season. While falling interest rates may help borrowers and potentially spur economic growth; it comes with a cost for savers. The minimal interest currently paid for online savings accounts and money market funds will likely decline. This means less money for those who are attempting to put something aside for that rainy day. The Fed’s rate cut also does not affect the high costs of wages for Employers. While the Federal minimum wage rate is currently $7.25/ hr, only 13 out of the 50 states have their minimum wage set at that rate. The majority of U.S. employers are paying anywhere from $10/ hr. - $17/ hr. for employee MINIMUM wage in addition to the employer taxes and benefits that the employer pays for each employee. Most Americans will not work for, nor can they survive on minimum wage due to the high cost of living. This leaves the employer with the dilemma of having to offer an hourly rate much higher than minimum wage just to get an employee to show up for work. This increases the employer’s costs which in turn requires him to pass his increased costs onto the consumer, leaving consumer prices at an all time high. Whether this aggressive rate cut by the Fed will actually spur the economy to a better place or send it into a severe recession is yet to be determined. I guess time will tell as we watch and wait. Tickers to consider: IKT , KALA , EVAX Sylva Disclaimer: https://www.sylvacap.com/disclai mer

Housing affordability is a major problem in America. Home prices spiked during Covid-19 and then the Fed’s war on inflation sent mortgage rates surging. Elevated mortgage rates and home prices have caused prospective homebuyers to push the “pause” button on buying a home. Additionally, homeowners have been reluctant to put their properties on the market and risk potentially forfeiting the ultra-low mortgage rates they locked in during the pandemic. This has created the perfect storm for a housing market that’s been more or less frozen. Home sales are expected to remain constrained as long as mortgage rates remain well over the 6% to 6.5% level. According to the most recent economic projections from June, the Federal Reserve doesn’t see inflation subsiding to 2% on a consistent basis until 2026, which could mean higher but declining short-term interest rates for the next two years. Inventory of unsold homes rose across the country this week — but at less than 1% rate. Slower growth of unsold homes on the market is a result of too few sellers on the supply side and stability on the demand side. Due to the weak or declining homebuyer demand, the unsold supply of homes continues to build. What is the economic impact should these homes continue to pour into the market, but remain unsold? Typically, when there is a flood of supply in the housing market, housing prices come down, making homes more affordable for potential buyers, and thereby “unsticking” the market. However, this is not the case in our current market. Despite the increase in homes on the market, average home prices still remain high. According to the National Association of Realtors (NAR), existing home prices were 4.2% higher in July compared to a year ago after rising for the 13th consecutive month. Yet, just because home prices keep rising, does not mean that a household’s income keeps rising. In order to qualify for the median-price existing single-family home in today’s market, a potential buyer must have a household income of around $110,000. Three years ago, households needed to earn about $59,000 to qualify for the same type of home. Therefore, lack of rising income and those who are locked into low interest rates, are keeping buyers from buying and sellers from selling, effectively “freezing” the market. A frozen housing market does affect the economy. Spending linked to home sales have dropped. There has also been a drop in the demand for work required for fixing up or renovating homes to get them ready to sell. Lack of home sales also means reduced sales or commissions for professionals handling the logistics of homes sales. According to the National Association of Home Builders, these activities normally account for 3-5% of the U.S. output. On the plus side, the millions of households that are “locked into” cheap mortgage rates theoretically should have extra money to spend on other things. This may be one reason that consumer spending has remained resilient despite higher interest rates. The U.S. labor market is also affected by the frozen housing market. Workers are reluctant to accept job offers in other states, if it means sacrificing their low mortgage rates. So labor mobility has been significantly reduced due to this “locked in” effect. The rental market is also affected by the frozen market. People who cannot afford to buy a home, end up being renters. When there is a flood of renters in the market, rental prices go up. Because rental prices are high, individuals can no longer afford to live on their own. They either end up moving back in with family, or end up having to have roommates just to survive. The Federal Reserve (FED) may be a primary key in unlocking the gridlock in the housing market. Although the FED has not cut the federal funds rate in over a year, lowering the federal funds rate, which highly influences mortgage rates, would be a step in the right direction to make housing more affordable and accessible for buyers. Tickers to consider: IKT , KALA , CEI , EVAX Sylva Disclaimer: https://www.sylvacap.com/disclaimer