Helping Investors Manage Post-election “Vibes”

Political

Economic

Summary:

Wealth Strategist Ben Rizzuto discusses how advisors can help clients manage emotions – whether positive or negative – following the election and stay focused on their long-term goals.

Over the past few months, there has been a lot of talk about “vibes.” Good vibes, bad vibes, brat vibes, crypto vibes … the vibes have taken over our collective psyches.

In fact, we’ve seen “nervous vibes” from investors of all stripes over the past two years through our Investor Survey. In both the 2023 and 2024 surveys, 78% of respondents cited the 2024 presidential election as their top concern as it relates to the impact on their finances. That concern – which topped worries about inflation or a potential recession – led to pessimism about the markets and shifts toward more conservative allocations.

Now that the election is decided, it may be time for a vibe check with clients.

Bad vibes and uncertainty linger

Even though the election has been decided, that doesn’t mean the emotions investors have grappled with over the past couple years will disappear. Given how tight the race was, there are inevitably many Americans who were disappointed with the outcome, and many uncertainties about the economy remain. This uncertainty could lead to emotional, short-term decision making, which as we know usually leads to less-than-optimal long-term investment results.

Now more than ever, advisors need to help clients focus on their long-term goals and not let their emotions lead them to make significant allocation changes. Here are a few ideas that I’ve found can help put the election and its impact – or lack thereof – on markets in proper perspective:

Research has shown that investors who let their political preferences dictate their investment decisions underperformed the broader market by 2.7% per year on average through over-trading, taking less risk, and having increased international allocations. In the one-year period following the last five elections (three Democrat wins, two Republican) the S&P 500® Index has returned on average +19%. From 1945 to 2024, the average return of the S&P 500 in the first year of a presidential administration has been +7.7%.

Finally, it may be helpful to remind these investors that everyone, no matter their candidate of choice, woke up the day after the election and went to work. And that (among other things) is ultimately what makes stock prices – and our long-term investments – increase in value.

Good vibes in markets – for now

Immediately following Trump’s win, equity markets shot upward, with the S&P 500 reaching an all-time high of 5,995 on November 8, 2024. Along with that, the VIX index of implied equity market volatility decreased significantly. Between November 1 and November 8, the VIX decreased by 31.7% to a level of 14.94.

The good vibes initially felt in markets may have some investors convinced the surge will continue for the next four years. And while markets do tend to go up during most presidencies (both Democrat and Republican), it’s important to remember that equity performance has historically been indifferent to election outcomes over the long term. In fact, every U.S. president going back to Herbert Hoover has seen a bear market during their administration.

Helping Investors Manage Post-election “Vibes”_1

Along with that, the Shiller CAPE Ratio, a stock valuation measure that uses real earnings per share over a 10-year period versus just a one-year period, was at 38.08 on November 7, 2024. (Its all-time high 44.19 in December 1999.) Research has shown that CAPE values are strongly negatively correlated with future returns (correlation coefficient = -0.7). The current elevated level may mean that stocks are overvalued and that markets could be headed for a period of lower returns.

Of course, while the VIX and the CAPE can help provide historical context, none of these measures can predict with certainty where stocks are headed, especially when so many unknown factors have the potential to change the trajectory of the markets and economy.

Long-term vibes matter most

So, what are investors to do? There are always reasons to be optimistic and pessimistic, but the market is going to do what it is going to do – and we can’t control that. The only thing we can control is the long-term plan we have created. And that should be a plan that is created with your goals in mind, not who the president is or isn’t.

In the end, my own vibes tell me that keeping a goals-driven, long-term focus is the best we can do, and history supports the effectiveness of that strategy.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Goldman Sachs

Economic

“The US economy is in a good place,” writes David Mericle, chief US economist in Goldman Sachs Research. “Recession fears have diminished, inflation is trending back toward 2%, and the labor market has rebalanced but remains strong.”

Goldman Sachs Research predicts US GDP will grow 2.5% on a full-year basis. That compares with 1.9% for the consensus forecast of economists surveyed by Bloomberg.

The US Economy is Poised to Beat Expectations in 2025_1

Three key policy changes following the Republican sweep in Washington are expected to affect the economy, Mericle writes in the team’s report, which is titled “2025 US Economic Outlook: New Policies, Similar Path.”

Tariff increases on imports from China and on autos may raise the effective tariff rate by 3 to 4 percentage points.Tighter policy may lower net immigration to 750,000 per year, moderately below the pre-pandemic average of 1 million per year.The 2017 tax cuts are expected to be fully extended instead of expiring and there will be modest additional tax cuts.

How will Trump’s policies impact the US economy?

While the expected policy changes under President elect Donald Trump may be significant, Mericle doesn’t project that they will substantially alter the trajectory of the economy or monetary policy.

“Their impact might appear most quickly in the inflation numbers,” Mericle writes. Wage pressures are cooling and inflation expectations are back to normal. The remaining hot inflation appears to be lagging “catch up” inflation, such as official housing prices catching up to the levels reflected by market rents for new tenants.

Goldman Sachs Research forecasts that core PCE inflation, excluding tariff effects, will fall to 2.1% by the end of 2025. Tariffs may boost this measure of inflation to 2.4%, though it would be a one-time price level effect. Our economists’ analysis of the impact of the tariffs during the first Trump administration suggests that every 1 percentage point increase in the effective tariff rate would raise core PCE prices by 0.1 percentage points.

The US Economy is Poised to Beat Expectations in 2025_2

“While we have yet to see definitive evidence of labor market stabilization, trend job growth appears to be strong enough to stabilize and eventually lower the unemployment rate now that immigration is slowing,” Mericle writes. The economy was able to grow faster than Goldman Sachs Research’s estimate of potential GDP growth over the last two years, in part because a surge in immigration boosted labor force growth. Next year, a tightening job market is expected to replace the role of elevated immigration.

Policy changes, meanwhile, are anticipated to have roughly offsetting effects on economic expansion over the next two years. “The drag from tariffs and reduced immigration will likely appear earlier in 2025, while tax cuts will likely boost spending with a longer delay,” Mericle writes.

Policy changes are likely in other areas too, such as a lighter-touch approach to regulation. But the effects are expected to occur mainly at an industry level rather than a macroeconomic level.

How likely is a US recession?

The US Economy is Poised to Beat Expectations in 2025_3

“Recession fears have faded as the downside risks that had worried markets failed to materialize,” Mericle writes. There’s 15% chance of US recession in the next 12 months, according to Goldman Sachs Research, which is roughly in line with the historical average.

“Consumer spending should remain the core pillar of strong growth, supported both by rising real income driven by a solid labor market and by an extra boost from wealth effects,” Mericle writes. “And business investment should pick back up even as the factory-building boom fades.”

There are risks to the economy, however. A 10% universal tariff, which would be many times the size of the China-focused tariffs that unnerved markets in 2019, would likely boost inflation to a peak of just over 3% and hit GDP growth.

Markets could become concerned about fiscal sustainability at a time when the debt-to-GDP ratio is nearing an all-time high, the deficit is much wider than usual, and real interest rates are much higher than policymakers anticipated during the last cycle.

The outlook for the Fed during the Trump administration

Goldman Sachs Research expects the Federal Reserve to continue to cut the funds rate down to a terminal rate of 3.25-3.5% (the policy rate is 4.5% to 4.75% now), which would be 100 basis points higher than in the last cycle.

That’s because our economists expect the Federal Open Market Committee to continue nudging up its estimate of the neutral rate (typically considered the interest rate that neither stimulates nor slows the economy). In addition, non-monetary policy tailwinds — in particular, large fiscal deficits and resilient risk sentiment — are offsetting the impact of higher interest rates when it comes to demand.

To stay updated on all economic events of today, please check out our Economic calendar

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Bruegel

Economic

At first sight, the 10 September 2024 European Union Court of Justice (CJEU) ruling on Apple’s Irish tax bill seems just about fair. The ruling, confirming that that Ireland granted unlawful aid to Apple and should recover €13 billion in unpaid taxes, tackles an extremely aggressive scheme. European Commission executive vice-president and competition commissioner Margrethe Vestager hailed it a “big win for European citizens and for tax justice” .

But the decision also raises challenging tax policy questions. Apple certainly engaged in very aggressive tax planning, facilitated by Irish law, but the CJEU granted the taxing rights over the shifted profits to Ireland exclusively, despite most the profits accruing elsewhere. This decision could have unintended negative consequences for the EU single market in the long term.

In particular, the ruling validates a situation in which rules on the allocation of profits to jurisdictions for taxing purposes remain flawed and generate distortions among EU members. An effort is underway to reform international rules on taxing some of the profits of the world’s largest companies but this is nowhere near completion; its finalisation is even more unlikely with President Trump back in office in the United States . In this context, there is a serious risk that imbalances in profit allocation within the EU will increase, with small open economies (Ireland, Luxembourg, Malta, Cyprus) being the winners, to the detriment of other member states.

The fruits of an aggressive strategy

Like many other US tech companies, Apple developed very aggressive tax strategies as early as the 1990s, using hybrid tax instruments and taking advantage of loopholes in international tax rules. Their profit-shifting strategy resulted in ‘stateless income’, ie income located outside any tax jurisdiction. This strategy was facilitated by a combination of accommodating tax rules in the United States and continental European countries, and Irish residence and profit-allocation rules. Two tax rulings issued by Ireland in 1991 and 2007 approved the strategy .

As a result, Apple shifted intellectual-property-related income outside of the EU almost tax-free. Profits made from sales of phones, laptops and iPads were largely untaxed in the countries where the sales were made, because they were booked in stateless companies, not taxed on their worldwide income by any country, including Ireland, which was their state of incorporation.

It was the 1991 and 2007 Irish tax rulings that the European Commission disputed. According to the Commission, in 2011 alone, Irish subsidiaries of Apple recorded a €16 billion profit, of which only €50 million was taxable, with tax of €10 million paid – an effective tax rate of 0.005 percent.

Instead, the Commission argued, profit allocation should have been decided on the basis of normal application of rules developed within the Organisation for Economic Co-operation and Development on transfer pricing and profit attribution rules. Though at the time, these rules were not yet incorporated into Irish legislation, they should have, according to the Commission’s view, led to the taxation of IP-related profits in Ireland.

In the Commission’s view, the profits should not have been allocated to the stateless companies because those companies lacked the functions necessary to handle and manage the intellectual property. Apple’s Irish branches performed more functions and the Commission claimed that profits should have been allocated to them in line with, first, the OECD transfer-pricing guidelines (TPG), and second the authorised OECD approach (AOA) on profit attribution to permanent establishments (even though the AOA was adopted by the OECD years after the Irish tax rulings were granted).

The trouble with transfer pricing

Transfer-pricing rules were first adopted by the League of Nations in the 1920s to allocate the profits of multinational companies to the ‘right’ jurisdiction and to avoid the same transactions being taxed in two countries. Under the ‘arm’s length principle’ employed in transfer pricing, transactions between legal entities in the same economic group should be priced at market price, similarly to transactions between independent parties.

Since the 1990s, the OECD has developed sophisticated methods to implement the arm’s length principle, leading in theory to profit being allocated to where it is earned (OECD, 2022). In short, the profit follows company functions, assets and risks. Economically, it should be allocated where value is created.

But the implementation of transfer pricing rules has resulted increasingly in profits being funnelled to low-tax jurisdictions where companies locate certain functions, assets and risks – just enough to attract the profits. In a knowledge-based and digitalised economy, excess returns are generated by capital and intangible assets (mostly intellectual property), which are much easier to shift around than physical assets, which were dominant in the bricks-and-mortar economy when the arm’s length principle was conceived. What was initially an anti-abuse rule has thus become a tool for tax planning.

To redress this situation and update the rules somewhat, a two-part global tax deal was agreed in October 2021 . Endorsed by more than 140 countries, this introduced a 15 percent minimum tax (Pillar Two) and a new profit allocation rule for the largest companies, including Apple. Under the rule (Pillar One), a share of profits would be allocated for taxing purposes to the countries where sales happen .

Pillar One aims precisely to adjust, through a formulaic approach, the deficiencies of the arm’s length principle. It marks an implicit agreement by countries that current rules do not ensure a fair allocation of taxing rights.

Two ironies

The first irony of the CJEU ruling on Apple is that it elevates an anti-abuse rule – transfer pricing – into a general and underlying legal principle at exactly the time when the international community has recognised that it results in flawed profit allocation.

It is probably hard to determine where value is created, but it seems obvious that Apple’s profits from the EU single market (and other jurisdictions) belong more to the countries where the products are sold, or where products are engineered and designed (United States), than to Ireland. At minimum, they should have been shared between these different countries and not allocated fully to Ireland .

The second irony is that the winner – in this case Ireland – takes all… but the winner does not want the money. Ireland aligned with Apple to fight the Commission in court and is now procrastinating in recovering and using the funds. Irish finance minister Jack Chambers said after the September ruling that it would be months before the €13 billion would be drawn down and used . Ireland expects a €25 billion fiscal surplus in 2024, partly from the Apple money, backed up by the 15 percent Pillar Two minimum tax .

Other low-tax countries, such as Luxembourg and Singapore, will also be collecting the minimum tax on the profits allocated by companies to their jurisdictions. They will benefit from windfall revenues. In short, small open economies, where excess returns were recorded benefit from additional revenue and do not have to share it more fairly. The half-repaired international tax system (or still half-broken) benefits them massively.

Meanwhile, Pillar One of the global tax agreement is nowhere near completion. It requires a multilateral convention which is not yet signed, and will need ratification by two thirds of US senators, which is unlikely. In this context, there is a serious risk of that imbalances in profit allocation within the EU will increase, with small open economies (Ireland, Luxembourg, Malta, Cyprus) being the winners to the detriment of other member states.

The EU’s tax struggle

The European Commission is pushing for changes to reduce distortions but EU countries are resistant to EU intervention in their tax affairs.

The Commission has proposed a transfer pricing directive (European Commission, 2023a) but EU countries instead have engaged in discussions to revive a Transfer Pricing Forum that was dissolved in 2019. Such a forum would likely result in a weak form of coordination, allowing for discussions between EU countries but hindering real harmonisation of transfer pricing practices. Furthermore, such a forum can only be established if the Commission withdraws its proposal for a directive, as EU Treaties forbid the Council of the EU from adopting acts that clash with active legislative proposals.

The directive as proposed would have the merit of clarifying the legal situation, with a harmonised application of the arm’s length principle. However, the plan is perceived by EU countries as not providing enough flexibility to reflect the dynamic of international tax rules. There is also a perception of a risk that competence will be transferred to the EU. Nevertheless, adoption of the directive, if it is made more flexible to better align with the OECD rules, could be a short-term win to provide more tax certainty, even though it would not address the issue of unfair profit allocation.

More importantly, in the absence of Pillar One implementation, the EU should revisit its own profit-allocation rules. Small open economies cannot continue to be the winners of the corporate income tax game without generating tensions.

As far back as the early 1990s, the need for EU corporate income tax harmonisation was identified (Ruding, 1992). The Commission proposed a common consolidated corporate income tax base directive in 2013, which would have allocated consolidated profits based on keys including revenue, people and assets. The resistance of member states to Commission meddling in their sovereign tax affairs killed the proposal.

In 2023, the Commission proposed a more modest plan with the BEFIT (Business in Europe: Framework for Income Taxation; European Commission, 2023b) proposal, which provides for common rules to compute profits at the group level but avoids the question of profit allocation between countries. The CJEU ruling might bring the profit-allocation debate back to the table. It may still be that EU countries prefer a less-efficient outcome, without EU competence, over an improved resolution that would transfer tax competence to the EU. Still, it is urgent to take action.

The new Commission for 2024-2029 could organise an open debate on the next steps, from both the tax angle and the fiscal perspective. It is unlikely that EU countries will agree harmonisation, whether of the tax base or transfer pricing. The lack of progress on international negotiations Pillar One will not result in the EU taking the lead. Realistically, to fix the existing imbalances, another Commission proposal, from 2021, on a new statistical resource for the EU budget based on a proxy of corporate profits, could be a quicker win (Saint-Amans, 2024). It would mitigate the absurd outcome of the implementation of the current rules, reinforced by the CJEU’s bad Apple decision.

To stay updated on all economic events of today, please check out our Economic calendar

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ACY

Economic

Forex

The FX market has been showing some volatility, with the U.S. Dollar (USD) showing signs of softening amidst varying economic signals. The slight dip in the USD's strength was influenced by inconsistent Treasury yields and a relatively quiet economic calendar for this week. This environment underscores heightened investor sensitivity to political developments, particularly in the United States.

Key focus areas include the appointment of influential economic policymakers, which could have far-reaching implications for fiscal strategies, trade policies, and overall market sentiment. Models analysing the USD indicate it may be overvalued against several major currencies, including the EUR, AUD, and CAD, raising questions about the sustainability of its current levels. Adding to the pressure, speculative long positions on the USD have surged to their highest in over a year, signalling a potentially limited scope for further appreciation.

CAD Outlook

The Canadian Dollar remains under strain, trading near multi-year lows against the USD. This weakness is largely attributed to domestic economic uncertainties and external factors such as fluctuating oil prices. The release of Canada’s inflation data yesterday has become a critical pivot for traders and policymakers alike. The deviation upward from expected inflation trends will significantly impact the Bank of Canada’s (BoC) monetary policy decisions, particularly regarding interest rate adjustments.

The CAD’s recovery remains uncertain, with markets anticipating whether the BoC will adopt a more hawkish or dovish stance in response to evolving economic conditions.

AUD Performance

The Australian Dollar has demonstrated a modest recovery, supported by a dovish yet cautiously optimistic approach from the Reserve Bank of Australia (RBA). Inflation data, while gradually stabilizing within the central bank’s target range, remains a key driver of monetary policy outlook. You can check my full breakdown on Australia economy outlook for 2025 here.Beyond inflation, the AUD's trajectory is heavily influenced by labour market dynamics and consumer confidence, which serve as barometers of broader economic health. Global commodity trends, particularly in metals and energy—sectors where Australia holds significant trade stakes—are providing additional tailwinds. Fiscal policies geared toward economic resilience have also buoyed market sentiment, suggesting a cautiously optimistic outlook for the AUD in the near term.

The changes on economic data, speculative positioning, and central bank policy expectations continues to shape currency trends globally. For the USD, its overvaluation narrative and stretched speculative positioning present significant resistance to further upward moves. In contrast, currencies like the CAD and AUD are navigating unique domestic and external challenges. For the CAD, inflation data and BoC policy are paramount, while the AUD balances domestic economic signals with external commodity-driven optimism.

To stay updated on all economic events of today, please check out our Economic calendar

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UBS

Economic

As private equity sees another round of increased investor interest, it is worth considering its role in today’s diversified portfolio. Investors have historically regarded private company exposure as a high-returning and diversifying asset class of its own – one which has outperformed public markets over the past decades while reducing volatility – an enhancement to the traditional 60/40 portfolio.

This has certainly been true in the past, but what about the future?

The Evolving Role of Private Equity in Diversified Portfolios_1

Why is private equity really different?

Private equity’s outpacing of public markets is a complicated story, most evident by asking “what is a public company?”

Historically, it has been a business of considerable scale, with a professional management team, experienced shareholders, and which is held to exacting standards of accounting and public disclosure. How does this hold up in 2024?

Private equity-backed companies are larger than ever, as more companies elect to remain private beyond the point where they would previously have gone public. Of companies with revenue over USD 100 million, Bain & Company notes that only 15% are publicly held.2 In many ways private equity has taken the place that publicly traded small-cap equity used to occupy, but there are material differences.

The Evolving Role of Private Equity in Diversified Portfolios_2

Private equity firms, as compared to the typical small-cap investor, are highly specialized and operationally focused. More importantly, they have control in the form of majority ownership which enables absolute discretion over the operating decisions of a portfolio company. This includes the selection of the management team; when private equity investors lose money, they do not ask what the management team did wrong – they ask what the private equity firm did wrong.

The average private equity owner is significantly more sophisticated than the average small-cap management team when it comes to financial engineering (usually generating a gain, but sometimes a painful loss).

Two more closely related aspects of private companies complicate the picture.

Public companies are required to report quarterly earnings, greatly increasing shareholder visibility into company performance, which cuts two ways. This is one of the greatest transparencies available to investors, which means quarterly earnings can become the primary focus of even a sophisticated and experienced management team. Most people agree that many important decisions should not be measured in quarters, a fact often sidelined when investing in public companies. Freedom from managing to quarterly earnings is a fundamental differentiating factor as compared to public companies.

There is another, less glamorous possibility for the seemingly more stable and more attractive return profile of private companies.

Cause for caution

If strict quarterly reporting standards result in a myopic focus on short-term performance, their absence can sometimes be to investors’ detriment and allow sponsors to hide behind opaque internal practices. Valuation methodologies for privately held companies can vary considerably between managers, and auditors allow significant discretion. The most proximate valuation metric is (ironically) public-company-comparables, the valuations at which listed companies tend to trade.

One particularly timely example in which investors may have a false sense of security is when smoothing effects obscure volatile performance. To take an obvious case, when a private equity portfolio contains a publicly traded position, the fund in almost every case has to take the public mark for its valuation. But a stock which loses and then regains value from one quarter-end to the next appears perfectly stable, where the same investor may perceive it as risky if they saw the daily performance.

Many factors behind valuing private companies can contribute to this return smoothing. The peer set can change (or be changed). The valuation multiple may be an average of several quarters, making it slower to reflect a new market reality. These effects can cause an investor to believe that its portfolio has a certain value even when that value could be predicted to be lost in the future – something which is not possible in public markets.And some academic studies have tried to correct for such effects, finding that while there is some smoothing, private equity returns are still distinct from public markets.

More than meets the eye: Size and manager selection

The fact that exposure can be tailored within a private equity allocation allows investors to configure their portfolio in such a way that reduces this effect further. While a mega-cap private equity fund likely mirrors public markets more closely, lower middle-market funds invest in small companies which have very different profiles than today’s large-cap dominated equity markets.

Venture capital (often also a part of the private equity allocation) is more distinct still. If public equity is the best way to bet on today’s winners, lower middle-market private equity and venture capital are the avenue by which to back their challengers.

Another important distinction is the lack of passive-investment options the way public markets have index funds.

This feature means manager selection, differing value creation abilities, and fund strategy are unique opportunities and risks to the private equity portfolio.

The Evolving Role of Private Equity in Diversified Portfolios_3

Private equity allocations continue to grow

The attractions of private equity have caused more investors to add exposure to their portfolios. Long dominated by the world’s most sophisticated investors, such longtime backers continue to increase allocations.

The Evolving Role of Private Equity in Diversified Portfolios_4

But the asset class is also becoming more mainstream; with retail investor access to alternatives proliferating, institutional investors of all stripes have indicated they plan to increase their allocations, including to private equity.

One reason for that may be the manager selection benefits already mentioned. At top quartile, the return potential of private equity (buyout and venture capital) is attractive. Combined with the active management component of private equity portfolios, and overlaid with the active management of portfolio companies, this outperformance and return profile can seem tangible and repeatable in the eyes of investors.

While private equity may not offer a public equity-based portfolio the same fundamental level of diversification that you would expect from fixed income or real assets, investors are recognizing the distinct value and return profile it brings to a portfolio. Little wonder investors are full speed ahead on private equity.

To stay updated on all economic events of today, please check out our Economic calendar

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JPMorgan

Economic

In 2018, the U.S. corporate tax rate was slashed from 35% to 21% when the 2017 Tax Cuts and Jobs Act (TCJA) went into effect. On the campaign trail, President-elect Trump proposed a further reduction from 21% to 15%, specifying this would apply to companies that make their products in America. To do this, Congress could reinstate the domestic production activities deduction in place from 2004-2017 that would effectively lower the corporate tax rate for domestic production to 15%. However, given the global reach of many U.S. corporations, the already low effective corporate tax rates and the dominance of services over goods producers, the impact would be more limited than his first corporate tax cut.

The passage of the 2017 TCJA made the U.S. corporate tax rate much more globally competitive and reduced effective sector tax rates. At 35%, the U.S. statutory corporate tax rate floated high above the global average of 24.2% for OECD member states. At 21%, the U.S. corporate tax rate is in line with the current OECD member average of 23.7%. The effective U.S. corporate tax rate fell from 28% in the five years prior to the tax cut to 18% between 2018 and 2023. At the sector level, utilities, staples and technology were the biggest beneficiaries.

However, this proposal is not for a universal cut, it is targeted at domestic producers. This could be approximated by reinstating the Section 199 domestic production activities deduction, which applied to qualified activities. More than one-third of corporate taxable income qualified for this deduction and $33.9 billion in deductions were claimed in 2013. Its key beneficiaries were, unsurprisingly, manufacturing, which accounted for 66% of the deduction claims and information technology, which accounted for 16%. Finance, health care, education and other services received little benefit and the deduction for certain oil and gas activities was at a lower rate, limiting benefits to energy.

If we combine companies with effective tax rates greater than 15% with greater than 80% of revenues derived domestically, 145 companies in the S&P 500, representing 18% of market cap and 23% of earnings could benefit. Of course, revenues derived domestically is an imperfect proxy because it does not reflect where goods are produced, but it can give a sense of scope. Of these 145 companies, 51 are in the services sectors (financials, health care, communication services) noted above that were not big beneficiaries of the Section 199 deduction. This doesn’t include services companies in other sectors. The President-elect also noted that companies that outsource, offshore or replace American workers would not be eligible, further narrowing the pool of qualified companies.

A corporate tax rate cut aimed at domestic manufacturing could benefit a subset of companies but would not likely provide the broad, sizable boost to corporate earnings that the last corporate tax cut produced. This suggests an active approach to potential beneficiaries while maintaining a broad focus on fundamentals across equities.

# of S&P 500 companies with effective tax rates <15% that generate >80% of revenues domestically

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Glendon

Economic

MetaTrader 4 (MT4) is one of the most popular trading platforms worldwide, loved for its intuitive interface, powerful analytical tools, and customizable options. While it’s typically used by traders via brokers, a common question arises: Can you use MetaTrader 4 without a broker? This article delves into the possibilities, limitations, and practical considerations of running MT4 as a standalone platform.

What Is MetaTrader 4?

MetaTrader 4, developed by MetaQuotes Software, is a robust trading platform designed primarily for forex, commodities, and CFD trading. It’s renowned for its advanced charting capabilities, support for algorithmic trading via Expert Advisors (EAs), and a vast library of technical indicators.

In traditional use, MT4 connects to a broker’s server, allowing traders to execute real-time trades on live markets. But what happens if you want to use MT4 independently?

Using MetaTrader 4 Without a Broker

1. Offline Mode

Yes, you can use MT4 without a broker by running it in offline mode. This setup is suitable for:

Chart Analysis: You can study historical data, test strategies, and use indicators for analysis.

Backtesting Strategies: Traders can upload historical market data to simulate and test their trading strategies.

However, in offline mode, you won’t be able to execute live trades or access real-time market data since these functions depend on broker connectivity.

2. Demo Accounts

Another option is to open a demo account directly through MetaQuotes or a broker offering MT4 services. Demo accounts give you access to virtual funds and live market conditions without risking real money. However, a demo account still technically requires broker integration, even if it’s not tied to live trading.

3. Simulated Trading Environments

You can also create or download simulated trading environments to practice strategies on MT4 without a broker. These simulations use preloaded market data but lack the dynamism of real-time markets.

Limitations of Using MT4 Without a Broker

While MT4 can technically operate without a broker, there are significant drawbacks:

No Access to Live Markets

Without a broker, MT4 cannot connect to live market feeds. This means you cannot execute trades or access current market prices.

No Order Execution

Trading directly requires a broker to process buy and sell orders. Without one, MT4 becomes a powerful analysis tool but not a trading platform.

Limited Features

Features like real-time signals, news updates, and market alerts rely on broker integration. Operating MT4 without a broker means missing out on these key functionalities.

Why You Still Need a Broker for Trading

While MT4 is a feature-rich platform, it acts as a bridge between the trader and the markets. Brokers provide:

Market Access: Direct connectivity to financial markets for real-time trading.

Liquidity: Ensures orders are executed efficiently.

Account Management: Offers trading accounts with leverage, margin, and withdrawal options.

Support Services: Includes customer support, educational resources, and additional tools.

When Is Using MT4 Without a Broker Useful?

Running MT4 without a broker can be beneficial in specific scenarios:

Learning and Practice: Beginners can explore the platform and learn its tools without risking capital.

Strategy Development: Traders can test and refine strategies using historical data.

Algorithm Testing: Developers of Expert Advisors (EAs) can use MT4 as a testing ground.

How to Set Up MT4 Without a Broker

Download MT4: Visit the MetaQuotes website to download the platform.

Load Historical Data: Import data for the instruments you wish to analyze.

Set Up Indicators and Charts: Customize your workspace with tools and indicators.

Run Simulations or Backtests: Use MT4’s Strategy Tester to evaluate your trading approach.

Conclusion

While it’s possible to use MetaTrader 4 without a broker, the platform’s full potential is unlocked only through broker integration. In standalone mode, MT4 serves as a sophisticated tool for analysis and strategy development but cannot facilitate live trading.

For those serious about trading, selecting a reliable broker that supports MT4 is essential. However, if you’re in the learning phase or experimenting with strategies, exploring MT4 without a broker can be a valuable stepping stone in your trading journey.

To stay updated on all economic events of today, please check out our Economic calendar

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