After the election, optimism in the equity markets is more cautious compared to 2016, primarily due to ongoing uncertainties surrounding tariffs and elevated prices. While both consumer and business confidence are on the rise, the enthusiasm isn't as high as before. The speaker explores the relationship between S&P 500 returns and bond yields, noting that cyclical sectors tend to thrive on strong macroeconomic data, even in a higher yield environment, with an ideal range for 10-year Treasury yields being between 4% and 4.5%. Additionally, the speaker points out the historically favorable December performance of the S&P 500 and Russell 2000, which may be further enhanced by growing confidence among small businesses.
