U.S. stocks are crazy for Trump, with capital inflows in November reaching a new high since 2000

Due to traders betting that the Trump administration will introduce comprehensive tax cuts and reforms favorable to American businesses, investors have been flooding into the U.S. stock market. According to data provider EPFR, since Trump's victory on November 5, investors have injected nearly $140 billion into U.S. equity funds, driving November to record the highest monthly inflow since 2000, and major U.S. stock indices have consequently set a series of historical highs. The market seems to have brushed aside the potential inflation rise that could result from increased tariffs and the possible consequences that might hinder the Federal Reserve's subsequent rate cut plans. Dec Mullarkey, Managing Director of SLC Management, stated: "The growth agenda proposed by Trump is being fully embraced by the market. The cabinet members selected by Trump also align quite well with market expectations." According to the Financial Times, Trump plans to include several financiers in his administration, including appointing investor Scott Bessent as Treasury Secretary and naming "cryptocurrency-friendly" Paul Atkins as Chairman of the Securities and Exchange Commission. Trump has also promised that as part of his "growth-friendly" agenda, his administration will seek to cut regulations and taxes. Since Election Day, the S&P 500 index has risen by 5.3%, bringing its year-to-date increase to 28%; smaller companies, which are more sensitive to fluctuations in the U.S. economy, have performed even better, with the Russell 2000 index hitting a three-year high last week. Emerging markets, on the other hand, suffered a net outflow of $8 billion, with losses in Western Europe amounting to about $14 billion. Kevin Gordon, Senior Investment Strategist at Charles Schwab, compared the current market gains to the significant rises seen in 2021 and the first half of this year. He stated, "Currently, we are not repeating the situation in 2021 where the market reached new highs but breadth deteriorated. I believe this is a relatively healthy setup." However, Parag Thatte, a strategist at Deutsche Bank, cautioned that as post-election market enthusiasm gradually fades, the rapid pace of inflows in November may slow down, but the long-term trend may continue to encourage new inflows, thereby boosting the U.S. market next year