The markets are grappling with the reality of a Donald Trump victory, which includes:
1) Lower stock indexes, but some clear winners. A drop of 5 percent or so is certainly expected, and there is still the risk of a longer fat tail, but not all stocks are dropping. Defense stocks like Raytheon and Lockheed Martin are likely early beneficiaries. Copper is up 2 percent, along with Caterpillar and Vulcan Materials, a sure sign that infrastructure plays will likely rally as well.
2) Less regulation. Early beneficiaries are likely to be industries that were threatened with heavier regulation under a potential Hillary Clinton presidency. That would principally include pharmaceuticals, but it may also include banks and even oil stocks, since its possible that lower support for renewable energy could benefit Big Oil.
3) Emerging market stock under performance. Developing economy assets are likely to remain under pressure for some time on currency issues, and concerns over trade.
4) Flight to "safety" to currencies like the Japanese yen and the Swiss franc. Both those currencies did strengthen, though both gave back much of their gains. This may force central banks to lower rates even more, or in the case of the Bank of Japan, deeper into negative rates. The European Central Bank may extend its quantitative easing (QE) program, now scheduled to expire in March 2017.
5) Lower chances of a Fed rate hike. With volatility up, the chances of a rate hike in December by the Federal Reserve diminish, though most traders feel the Fed could still make a case for a rate hike—though likely making clear the "glide path" would be even more shallow than it had previously indicated.