The election produced an unexpected outcome and caught the markets by surprise. When a Trump victory seemed likely late in the evening on election night, Global stock markets were volatile and Dow futures saw a significant drop. A rallying U.S market, however, followed the falling markets in Asia, as investors realized that despite Trump’s anti-trade/anti-immigration campaign rhetoric, many of Trump’s policies are pro-growth.

With a Republican majority in both the House and Senate, Trump stands a good chance of enacting many of his policies, which could provide a meaningful stimulus to the economy. Additionally, the Trump administration will be inheriting a U.S. economy that remains in decent shape. Real GDP growth is hovering around 2 percent, the Federal Reserve remains accommodative, there is a low inflation backdrop, and a recent pick-up in corporate profit growth, following an earning recession in 2015 and the first part of 2016.

Looking forward, the U.S. economy is likely to remain strong regardless of who serves as President. However, the President and Congress have the power to make policy changes that effect markets. Below are some of the changes we might expect to move forward during the Trump administration:

Tax Reform - May lead to lower corporate and personal tax rates, while offering corporations incentives to repatriate foreign profits to the U.S.

Infrastructure Spending - The Trump campaign pledged to repair our ageing infrastructure across the country, while anticipating that part of this increased spending could be absorbed through tax reform and the repatriation of foreign corporate profits.

Trade Agreements - A president has more unilateral power to make changes to current trade arrangements without having to deal with Congress. This could allow President Trump to rewrite deals that are tougher on trade partners. The possible downside, however, is that this could result in trade wars and put a crimp on exports, while putting a premium on imports. This could lead to recessionary and inflationary pressures. Some insiders feel that Trump is more pragmatic than the candidate Trump. They believe he would do more muscle flexing to arrive at better terms in our trade agreements, rather than risk devastating trade wars.

Fewer Regulations – These could lead to an improving backdrop for the financial service and energy industries. Candidate Trump said he’ll roll back 2010’s Dodd-Frank financial regulation law. He also said that he would pull out of the Paris climate peace deal and undo the environmental regulations in the accord. While this would promote fracking and stimulate the coal mining industry, it could have negative effects on renewable energy companies and possibly have global warming consequences.

Health Care - As a candidate, Trump didn’t offer any precise plan for health care and campaigned to repeal the Affordable Care Act (ACT). However, repeal of “ACT” would not only cancel coverage for 20 million Americans, but would put pressure on a Republican Congress to offer up an alternative. There are too many fiscal conservatives in Congress to take on such a task, so it is more likely they will move to repeal and rebrand “ACA”. There may be some additional market volatility, especially in the health care sector, while this is being sorted out. The outcome will most likely will not have a significant effect on the “ACA” beneficiaries.

As we move forward, the new administration may drift toward more populace policies for the next four years that could cause some concern and heightened volatility in the markets. Fundamentals however, still matter, including asset allocation, diversification, quality earnings growth and valuations. You should continue to review your accounts and reaffirm your individual goals and time horizons.