What’s going on here?

The defense and energy industries are gearing up for growth, just days after the final votes were cast in the US presidential election.

What does this mean?

European allies are anticipating some serious nudging from the new White House about their NATO contributions. And that’s good news for defense companies on both sides of the Atlantic: an increase in global military spending would boost their demand. Closer to home, US liquefied natural gas developers are eagerly awaiting a green light on new export projects. Over the past four years, projects have been slow to gain regulatory approval because of climate concerns, but the president-elect has said that will be less of a sticking point when he takes office.

Why should I care?

For markets: Not everyone gets a trophy.

Investors are already picking winners and losers under the new administration. With a possible 10% tariff on all imports, Europe’s big drugmakers, automakers, and chemical companies – all key exporters to the US – are bracing for a slowdown. Renewable energy companies are also seeing their outlooks dim, as priorities shift away from sustainability and back toward fossil fuels. Still, it’s worth remembering that not everything said in a campaign becomes policy. And even when certain things do, impacts often aren’t as severe as feared. So when markets are reacting and (overreacting) to expectations, that could be a prime time to spy quality stocks at a bargain.

The big picture: Fuel to the inflation fire.

Some experts are worried that the Federal Reserve’s latest rate cut might be a bit hasty. That’s because fresh proposals like across-the-board tariffs could stoke inflation by driving up import costs. At the same time, tougher immigration policies and mass deportations could shrink the country’s labor pool, pushing up wages and sending production costs higher. That could have the central bank playing a long game of inflation whack-a-mole.

What’s going on here?

China just announced a massive $1.4 trillion financial boost for local governments, as it braces for increased trade tensions with the US.

What does this mean?

The US president-elect has threatened 60% import taxes on Chinese goods, which would hobble the country’s already struggling economy. Local governments are strapped as it is, barely making interest payments on their debt. Makes sense, then, that the Chinese government is doing what it can now. The rescue measures announced on Friday would let those local administrations borrow roughly $836 billion over three years and reallocate around $557 billion from other ongoing projects. That might look like a lifeline – and a badly needed one – but it’s mostly a debt shuffle. China is simply using debt to manage... yep, more debt. And that shuffle – no matter how big – isn’t likely to boost consumer demand, which is why investors have so far been unimpressed.

Why should I care?

For markets: Darkest before dawn.

It’s been a rough road for China. And after several failed comebacks, investors are probably feeling once bitten, twice shy. But there are some rays of hope: September’s stimulus measures – rate cuts and support for stocks and property – are starting to show results. Housing sales have ticked up, business activity has rebounded, and stocks are trading higher. Plus, the government can make more spendy moves in the future – and it probably makes sense to hold fire until potential US policy changes are further along.

The bigger picture: Spend, spend, spend.

For the past 15 years, central banks have steered the ship for major economies – with ultra-low interest rates and enormous bond-buying programs. Now, government spending is increasingly taking the helm. And this change comes with risks: higher debt loads, repayment concerns, and potentially rising inflation down the line. Those factors could all impact stock values, economic growth, and borrowing costs – so they’re well worth watching closely.