In the early morning hours of Wednesday, the news broke: Former President Donald Trump won enough votes in the Electoral College to win the presidency.

Whether that alleviates or increases anxiety for you, it does mean that a large amount of uncertainty has been eliminated. There will be no protracted legal battles over the results for the rest of the year. And that certainty is something the markets are responding to.

On this post-election day, Marketplace Morning Report host David Brancaccio spoke with two economists to get their thoughts on how markets are reacting to the election news. Firstly, we are joined by Ben Kumar, head of equity strategy at Seven Investment Management. You can listen to the interview by clicking on the audio player below.

David Brancaccio: The acronym for this is called “the Trump trade.” Walk me through the logic of this, starting with stocks. What general categories do they buy here and what is the strategy?

Ben Kumar: US stocks are actually the strategy. I mean, the Dow and the Nasdaq and the S&P 500. One of the other interesting ones to look at is the Russell 2000, which are smaller US companies, and when I last checked they were up 5% to 6% . You know, there’s a real sense that this means that domestic American strength is back on the map, which at least echoes some of the things that Donald Trump has said. And it seems like the markets still want to believe in it today, at least.

Brancaccio: Some of these US-based companies are, of course, multinationals, and some will argue that the tariffs the next president promises will create friction in the economy, contribute to inflation, and clog the arteries of global trade. That would probably hurt the profits of some of these companies that people are buying this morning.

Kumar: Yes, I think that’s absolutely right. There’s a version of Tesla stock trading in Frankfurt, Germany, that’s up 15 or 16%. But you know, if tariffs are imposed and Chinese retaliation comes, there’s no guarantee that Tesla will continue to do better. So you are absolutely right. But I think what we’re seeing this morning, before any of the details come out, is just a general wave of optimism and actually, I think, a wave of relief that won’t last long. another month or two months. We’re ready now and we can start to look to the future and see what’s next for an American economy that feels, if you listen to Donald Trump, like it’s ready to start growing again.

Brancaccio: Yes, there is a VIX index that we have here from Chicago, the so-called stock market volatility fear index – which is way down this morning, which underlines your point there. Now the bond market has fallen sharply, causing 10-year yields to rise sharply this morning. What’s the logic there?

Kumar: Well, I mean, some of the things that have been said, if you look at the actual manifestos and stuff, is that there will be more lending under a Trump presidency than under a Kamala Harris presidency, to the tune of almost $4 trillion more. . But if you borrow, and if you do, you can kick-start growth. Actually, that’s not such a bad thing. However, that growth will be 234 years in the future. So as of today, the bond markets have become a little more sensible. They’re just going to borrow more, so we probably want to charge them a little bit.

Next, let’s bring in economist Julia Coronado, founder of MacroPolicy Perspectives and professor at the University of Texas-Austin. Listen to her interview by clicking on the audio player below.

David Brancaccio: They call it “the Trump trade,” but make sure we understand this.

Julia Coronado: Yeah, so the Trump trade means there will be tax cuts, there will be tariffs, and the budget deficit will increase. And what that means is a higher dollar, higher inflation and therefore higher interest rates. But it’s good for the shares.

Brancaccio: Okay, so a bigger deficit. I thought this conversation about cutting the federal budget with billionaire Elon Musk and hedge fund John Paulson might help?

Coronado: Yes, that is not what the Responsible Budget Committee estimates. They estimate that Trump’s proposals could add $7.5 to $8 trillion to the budget deficit over the next decade. And it is always easier to give sugar than to give spice, so cutting taxes is the top priority, and the market is betting that this will happen, especially given the power of victory.

Brancaccio: Indeed. Now look at the rush into stocks. I mean, I expected this morning to see people buying fossil fuel companies, but it’s a much broader base.

Coronado: Yes, Trump comes with a very good economy and US outperformance. So the assumption is that if you add tax cuts to that, that will be good for growth in a broad way. Of course, tariffs can hurt growth. So this is the immediate response – how that will play out over time remains to be seen.

Brancaccio: And as we look, going back to your previous point, this morning’s higher interest rates make the US dollar more attractive. You see all this happening in the currency markets today.

Coronado: Absolute. These moves are huge, meaning big jumps in longer-term interest rates, just as we hoped they were about to fall and create a much stronger dollar against most currencies.

Brancaccio: So the Federal Reserve, which starts meeting today and makes a judgment on interest rates tomorrow, will move in the opposite direction.

Coronado: That’s right. The Fed has tried to cut rates to give the economy a break and stimulate the housing and other rate-sensitive sectors, but it has no control over longer-term rates. So they will likely continue with a 25 basis point rate cut, but that will not translate into lower mortgage rates or lending rates because the longer interest rates are driven away from expectations of higher inflation and higher deficits.