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Trump Urges for Lower Interest Rates: Sector ETFs to Benefit

Trump Urges for Lower Interest Rates: Sector ETFs to Benefit

Yahoo28-01-2025

President Donald Trump, in a video address to the World Economic Forum in Davos, Switzerland, supported lower interest rates. Although he did not directly name the Federal Reserve, Trump signaled his intention to put pressure on the central bank to adopt a more accommodative monetary policy.
Trump's remarks and comments reignited tensions among Federal Reserve officials. Trump also hinted at direct engagement, telling reporters later that he plans to speak with the Fed Chair Powell 'at the right time.'
Fed officials, including Chair Powell, have repeatedly emphasized the importance of maintaining the central bank's independence. Powell has asserted that the Fed's decisions are based on economic data rather than political considerations.
Although the President nominates members to the Fed's board of governors, he lacks direct statutory authority over its decisions. Historically, the Fed's autonomy has been viewed as crucial for ensuring market stability.
Traders anticipate the first potential rate reduction in June, with a possible second cut by year's end, according to CME Group data. These expectations follow a full percentage point of cuts in late 2024, after a previous tightening cycle aimed at combating inflation.
Trump criticized the inflation surge that began under his predecessor, former President Joe Biden, attributing it to inefficient deficit spending. Despite inflation remaining above the central bank's 2% target, Fed officials have noted a moderation in price increases, suggesting monetary policy no longer needs to be as restrictive.
Below, we highlight a few sector-based exchange-traded funds (ETFs) that are likely to gain from hopes of deeper rate cuts ahead.
Regional Banks – SPDR S&P Regional Banking ETF (KRE)
More meaningful rate cuts could stimulate stock growth, especially in regional bank stocks, since experts believe the banking crisis was triggered by a sharp increase in interest rates over the past year. Plus, the Fed rate cuts will likely steepen the yield curve, which is another positive for the space.
Real Estate – Vanguard Real Estate ETF (VNQ)
The space couldn't do well lately. However, with rates likely to dive ahead, real estate stocks, which thrive in a low-rate environment, are likely to excel. The fund VNQ even yields 3.79% annually. This is a plus for investors.
Utilities – Utilities ETF Vanguard (VPU)
Utility companies often are debt-dependent due to their significant infrastructure investments. Lower interest rates reduce the cost of servicing this debt, improving profitability. Moreover, utilities are generally seen as stable, income-generating investments, making them attractive in a low-rate environment.
Technology – Transformational Data Sharing Amplify ETF (BLOK)
The areas of blockchain, digital technology and data sharing have surged lately due to the space's inherent strength and a less-hawkish Fed. With the Fed likely to be more benevolent in 2025 and the strength of data sharing and AI space remaining intact, digital tech ETFs should continue to do well in 2025.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Vanguard Real Estate ETF (VNQ): ETF Research Reports
Vanguard Utilities ETF (VPU): ETF Research Reports
SPDR S&P Regional Banking ETF (KRE): ETF Research Reports
Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports
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Canada plans to hit NATO spending target early and reduce US defense reliance, Carney says
Canada plans to hit NATO spending target early and reduce US defense reliance, Carney says

Associated Press

time28 minutes ago

  • Associated Press

Canada plans to hit NATO spending target early and reduce US defense reliance, Carney says

TORONTO (AP) — Canada will meet NATO's military spending guideline by early next year and diversify defense spending away from the United States, Prime Minister Mark Carney said Monday. Carney said Canada will achieve NATO's spending target of 2% of gross domestic product five years earlier than it had previously planned. 'Our military infrastructure and equipment have aged, hindering our military preparedness,' Carney said. 'Only one of our four submarines is seaworthy. Less than half of our maritime fleet and land vehicles are operational. More broadly we are too reliant on the United States.' According to NATO figures, Canada was estimated to be spending 1.33% of GDP on its military budget in 2023, below the 2% target that NATO countries have set for themselves. Canada previously said it was on track to meet NATO's spending target by the end of the decade. 'Our goal is to protect Canadians, not to satisfy NATO accountants,' Carney said. The announcement of increased spending came as Canada is about to host a summit of the Group of Seven leading industrialized nations in Alberta on June 15-17, and before the NATO summit in Europe. It also comes as NATO allies are poised to increase the commitment well beyond the 2% target. NATO Secretary-General Mark Rutte said last week that most U.S. allies at NATO endorse U.S. President Donald Trump's demand that they invest 5% of gross domestic product on their defense needs and are ready to ramp up security spending even more. Carney has said that he intends to diversify Canada's procurement and enhance the country's relationship with the EU. 'We should no longer send three quarters of our defense capital spending to America,' Carney said in a speech at the University of Toronto. 'We will invest in new submarines, aircraft, ships, armed vehicles and artillery, as well as new radar, drones and sensors to monitor the seafloor and the Arctic.' Canada has been in discussions with the European Union to join an EU drive to break its security dependency on the United States , with a focus on buying more defense equipment, including fighter jets, in Europe. Carney's government is reviewing the purchase of U.S. F-35 fighter jets to see if there are other options. Carney said that the U.S. 'is beginning to monetize its hegemony: charging for access to its markets and reducing its (relative) contributions to our collective security.' 'Middle powers compete for interests and attention, knowing that if they are not at the table, they will be on the menu,' Carney said. Trump's calls to make Canada the 51st U.S. state have infuriated Canadians, and Carney won the job of prime minister after promising to confront the increased aggression shown by Trump. Carney said that the long-held view that Canada's geographic location will protect Canadians is becoming increasingly archaic. European allies and Canada have already been investing heavily in their armed forces, as well as on weapons and ammunition, since Russia launched a full-scale invasion of Ukraine on Feb. 24, 2022.

Musk predicts Trump's tariffs will cause recession amid growing spat with president
Musk predicts Trump's tariffs will cause recession amid growing spat with president

Yahoo

time31 minutes ago

  • Yahoo

Musk predicts Trump's tariffs will cause recession amid growing spat with president

Former presidential adviser and confidante Elon Musk escalated his growing feud with President Trump by saying the president's tariffs would result in a recession later this year. 'The Trump Tariffs will cause a recession in the second half of this year,' he wrote on his social media website, X. The remark is the latest dig at Trump's policies since the tech billionaire left his role in the administration last week as head of the government cost-cutting panel known as the Department of Government Efficiency, or DOGE. Musk blasted Republicans' tax-and-spending-cut bill this week, which Trump helped to shepherd through the House last month, calling it a 'disgusting abomination.' 'I'm sorry, but I just can't stand it anymore,' Musk wrote on X on Tuesday. 'This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination. Shame on those who voted for it: you know you did wrong. You know it.' Beyond the president's policies, Musk also attacked Trump personally, claiming Thursday that Trump is mentioned in files pertaining to Jeffrey Epstein, the convicted child abuser who died in jail in 2019. 'Time to drop the really big bomb: [Donald Trump] is in the Epstein files. That is the real reason they have not been made public. Have a nice day, DJT!' he wrote on X. Musk's efforts with DOGE during his time in the Trump administration stirred a flurry of controversy and led to resignations of top officials in multiple agencies, including the IRS and the Treasury Department. Concerns about his team's access to private data have resulted in lawsuits. 'DOGE's mission to advise OMB and the White House on how to slash regulations and cut expenditures puts at risk important consumer safeguards and public protections,' Robert Weissman, co-president of Public Citizen, an advocacy group that brought a lawsuit against the administration, said in a January statement. Controversies have also been swirling about Musk's personal life. A recent New York Times investigation found that Musk was 'juggling … a drug habit far more serious than previously known.' Musk's criticism is channeling concerns among economists and business leaders about the prospect of a recession resulting from tariffs. Trump's tariffs — notably his 'reciprocal,' country-specific tariffs and triple-digit tariffs on China — have been walked back, but a highly elevated overall U.S. tariff rate relative to recent decades has remained in place. The overall tariff rate is somewhere between 10 and 15 percent now, according to various estimates, and Trump's tariffs are expected to pull in about $2.5 trillion in federal revenues. The Federal Reserve has repeatedly painted a stagflationary picture of the economic outlook in recent months. The Congressional Budget Office (CBO) factored a boosted inflationary prediction of 0.4 percentage points as a result of the tariffs into its budgetary calculations this week. However, a recession is far from guaranteed, and many predictions about the economy have grown more positive as trade negotiations have continued. The U.S. trade deficit narrowed by a record amount in April following intense front-running of tariffs by importers in the first quarter, causing a collective sigh of relief from many investors. 'The drop in imports should have a positive impact on GDP, quelling any fears of a recession in the near term,' Damian McIntyre, vice president at investment firm Federated Hermes, commented Thursday. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Opinion - Trump-Musk divorce threatens the president and the entire Republican Party
Opinion - Trump-Musk divorce threatens the president and the entire Republican Party

Yahoo

time32 minutes ago

  • Yahoo

Opinion - Trump-Musk divorce threatens the president and the entire Republican Party

Few expected the relationship between President Trump and Elon Musk to survive four years, but the spectacular collapse of this partnership has shocked even seasoned observers with its speed and intensity. Now, as two of the world's most powerful men openly clash, there are seismic implications for the country as a whole and the Republican Party specifically. Put another way, not only does this fissure expose cracks in the GOP and MAGA coalition, it's also a considerable threat to Republicans' midterms hopes and Trump's signature legislation. The fight, which began two weeks ago when Musk expressed 'disappointment' with Trump's 'one big, beautiful' bill had initially been confined to disagreements over the legislation, rather than personal attacks. Then, on Thursday afternoon, it escalated in unprecedented, dramatic fashion. Following Trump's recent comment that he would have won Pennsylvania without Musk's help, Musk replied 'Without me, Trump would have lost the election, Dems would control the House and Republicans would be 51-49 in the Senate.' That was just Musk's opening salvo against the man he spent roughly $300 million to get elected. The tech billionaire then went on a blistering war path. He claimed Trump was on 'the Epstein list,' supported impeachment — a touchy subject for the twice-impeached Trump — and claimed that tariffs would cause a recession. Not content with attacking Trump, Musk has also threatened to fund primary challenges to Republicans who support the bill, and has criticized both Senate Majority Leader John Thune (R-S.D.) and Speaker of the House Mike Johnson (R-La.). With unprecedented speed, Musk went from the man who could pour hundreds of millions into Republican coffers to Republicans' enemy number one. Influential commentator Steve Bannon pushed for Musk's deportation, claiming he's an illegal alien, and Trump threatened to cancel all government contracts with Musk's multiple companies, saying Musk 'went CRAZY.' Whether or not the rumors of an impending détente between the two is enough to heal the rupture remains to be seen, but it's unlikely that all of the pieces will ever get put back together. Given Musk's deep pockets and control of social media platform X, where he has a cult-like following, Trump and the Republicans now find themselves in a treacherous spot at a precarious time. Indeed, even before the dramatic escalation, Trump's 'big, beautiful bill' was in limbo in the Senate. As Alexander Bolton noted in this publication prior to Thursday's blowup, Trump's bill is 'losing momentum in the Senate in the face of blistering attacks from Elon Musk.' To that end, Musk's criticisms of the bill and threats to primary its Republican supporters has already led two House Republicans who voted for the bill, Reps. Marjorie Taylor Greene (R-Ga.) and John Rose (R-Tenn.), to come out against some of it. It appears that this fight has brought some Republicans back into Trump's fold. Rep. Chip Roy (R-Texas), who had been opposed to the bill prior to its passage in the House, condemned Musk, saying he 'crossed the line.' And Rep. Tim Burchett (R-Tenn), another House conservative, dismissed Musk's influence, saying he is 'just another shiny object.' For their part, Republican senators who may have had doubts about Trump's signature legislation now risk being seen as taking Musk's side and being disloyal to the president. However, it would be a mistake to overlook the implications of the breakup or the dangers for Republicans. If he wants, Musk could very easily fund primaries against vulnerable GOP House members, and his control of X gives him unprecedented influence over the media ecosystem. Further, Musk's influence among the Silicon Valley cohort that moved stridently to the right in 2024 could peel off a new group of Republican voters and donors. In that same vein, there are possible electoral consequences for Republicans, even if tempers between Trump and Musk cool down. Trump was counting on the bill's passage to be a significant political tailwind that would boost his polling numbers and Republicans' midterm hopes, particularly given the ongoing chaos over tariffs and trade policy. Now, whichever version of the bill eventually passes, Republicans look like the party of chaos. It is entirely possible that this ongoing feud dents voters' confidence in Republicans' ability to competently govern, something Democrats are clearly hoping for. As the Wall Street Journal reported, Democrats are 'reveling' about the fight, with Senate Minority Leader Chuck Schumer (D-N.Y.) reposting Musk's attacks and House Minority Leader Hakeem Jeffries (D-N.Y.) taking digs at the 'GOP civil war.' To be sure, despite Musk's efforts, it remains likely that a version of Trump's 'one, big, beautiful bill' will still pass, but Republicans now have a bigger headache. Ultimately, divorces are always messy, but the Trump-Musk divorce is unprecedented, and it could not have come at a worse time for Republicans. With razor-thin margins in the House and the absence of Trump's much-touted trade bills, it poses the most significant threat to Republicans' midterm hopes, and by extension, the rest of Trump's term. Douglas E. Schoen and Carly Cooperman are pollsters and partners with the public opinion company Schoen Cooperman Research based in New York. They are co-authors of the book, 'America: Unite or Die.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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