To shore up their profit margins, at least 50 major U.S. retailers, including Macy’s and T.J. Maxx owner TJX (TJX), hiked interest rates on their store credit cards ahead of the Federal Reserve’s anticipated rate cuts, according to a Bankrate survey that analyzed data from 100 of the nation’s largest retailers.

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Inflation sped up slightly in October on the heels of the Federal Reserve’s second consecutive interest rate cut.

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Donald Trump is a crypto bro who’s going to cut taxes and regulations, loves big banks and corporate mergers, doesn’t care about deficits, loves oil and hates wind and solar, and might actually let RFK Jr. do some kooky health stuff. That, roughly speaking, is the picture of Trump that you get when you look at how markets reacted this week to his reelection as president of the United States. In other words, the markets are saying that he’s pretty much who many of us thought he was.

The immediately obvious conclusion to draw from the fact that the stock market spiked on news of Trump’s win—with all three major indexes hitting record highs—is that traders think he’s going to be very good for business. But traders were not simply buying stocks across the board; they were pouring money into assets they think will benefit from the next Trump presidency, while punishing those they think will be hurt by it.

The sheer number of sectors—and individual stocks—that traders seem to believe will be affected by Trump winning is striking. It reflects Trump’s stated intention and willingness to use executive power in an unfettered way. So what we’re seeing is the traders scrambling to try to read Trump’s mind—because they need to figure out how his whims might shape the fate of multibillion-dollar companies.

[Read: The strategist who predicted Trump’s multiracial coalition]

Some version of this market response happens after every election: Government policy has a big impact on business outcomes, and traders’ job is to anticipate that impact on their holdings. It’s also worth remembering that the stock market rose sharply in 2020 after Joe Biden’s victory looked assured, so some of this week’s rise is probably the result of traders’ relief that we’re not headed for months of legal challenges and conflict over who won. But going by what he has said over the course of the campaign, Trump has very ambitious plans.

Most starkly, he has promised to impose across-the-board tariffs on almost all imported goods, and 60 percent tariffs on Chinese imported goods in particular, and to deport millions of undocumented immigrants. Much of this Trump can direct on his own account, without seeking congressional approval.

The stock market is therefore working overtime to parse his various campaign promises: which it should take seriously and which it can ignore. For instance, one promise that traders seem to be comfortable ignoring is Trump’s vow to let Elon Musk slash trillions of dollars in federal spending. (Musk has claimed, improbably, that he can cut “at least $2 trillion,” mainly by getting rid of government waste.) If traders actually believed that was going to happen, the market would have sold off steeply, because government budget cuts of such magnitude would send the economy into a deep recession.

Instead, the market believes Trump is going to do the opposite: Far from embracing austerity, Trump is likely to cut taxes and increase spending, pouring more money into the economy. That would increase the risk of inflation—ironically, given the fact that Trump won in large part because voters were angry with Biden and Kamala Harris over high prices—which is why, on the first day of trading after Trump’s election, interest rates on 30-year Treasury bonds rose by their biggest margin in more than two years. This is because, when the risk of inflation rises, bond investors demand higher interest rates to protect their position.

The real market action, though, was among individual assets, and the most obvious winners were companies in sectors that Trump plans to deregulate. Share prices in oil drillers and allied service companies, for instance, soared on the expectation that Trump will be a “Drill, baby, drill” president. The value of cryptocurrency assets and stocks likewise shot up, because Trump is expected to replace the current Securities Exchange Commission chair, Gary Gensler, with someone far more tolerant of crypto than Gensler has been, and because Trump’s general attitude toward financial regulation is, at best, lax. Given that Trump shilled for a memecoin himself during the election campaign, concluding that the crypto industry’s legal worries are mostly behind it seems like a good wager.

Oddly, though, Trump-themed memecoins themselves did quite badly, with the most popular Trump memecoin, which is literally called MAGA, falling by more than 50 percent this week, after initially spiking following Trump’s win. And his social-media company, the Trump Media & Technology Group, is also on pace to finish the week down, despite much anticipation that a Trump win would be good for the stock. Both of these sell-offs appear a classic example of traders buying the rumor and selling the news.

Financial stocks rose strongly, with companies such as Goldman Sachs and Morgan Stanley registering double-digit gains on Wednesday, presumably on the expectation that they, too, will be operating in a friendlier regulatory environment. Another intriguing sign was that shares of Discover, which is in the process of being acquired by Capital One, saw a 17 percent increase. That merger has yet to be approved by federal regulators, and it’s come under considerable scrutiny—including from Democratic members of Congress—for its arguably anticompetitive effects. The big spike in Discover’s stock price suggests that traders believe, almost certainly correctly, that for all of Vice President–elect J. D. Vance’s criticism of corporate consolidation, a Trump administration will be much friendlier to mergers and acquisitions than the Biden administration has been.

The stocks whose booms were the most ominous sign of what a Trump presidency has in store were those of Geo Group and CoreCivic, private-prison companies that already do a lot of business running migrant-detention facilities. Geo Group also administers a GPS-monitoring programs for asylum seekers who have been paroled into the country while waiting for their cases to be heard. If Trump expands facilities to detain people who cross the border and implements his plan for mass deportations, the demand for these companies’ services will rise sharply. Geo Group’s stock was up 42 percent on Wednesday, and CoreCivic’s rose 29 percent.

[Read: Don’t give up on America]

There were losers too. Electric-vehicle manufacturers, with the exception of Musk’s Tesla, saw their stocks fall, presumably because Trump is likely to eliminate subsidies for electric vehicles. The same was true for renewable-energy companies such as First Solar that will now be operating in an environment where the federal government has little interest in, if not outright hostility toward, their business. Tesla’s stock bucked this trend, rising 13 percent on a day when most competitors saw their stocks fall. Traders know that a company is set for success when its CEO played a major role in the president’s election.

Stocks in home-improvement retailers such as Home Depot and Lowe’s also slipped on Wednesday, though they recovered most of their losses by the end of the week. Some of that movement may have involved concern about the effect of Trump’s tariffs, which will force retailers to raise prices or else see their profit margins shrink. But the bigger reason was that higher interest rates provoked by Trump tax cuts would crimp new-home buying and renovation—and more expensive mortgages are bad for the Home Depots of the world even with more money in the economy. Real-estate firms similarly saw their shares fall.

The most intriguing category of losers were companies in sectors that could be a target of government action if Trump follows through on his promise to make Robert F. Kennedy Jr. some kind of health czar. (As yet, what specific job that might be is unclear, but RFK Jr. himself has been claiming some such role in interviews.) Pharmaceutical companies that make vaccines, particularly COVID-19 vaccines, saw their stocks fall. Trump has said he wants to defund any school that still has vaccine mandates (whether he means a COVID-19-vaccine mandate or one applying to any other type of vaccination is not known). But clearly, any exercise of power by RFK Jr. over their industry would be very bad news for vaccine makers.

Less glaring but likely related, the stocks of consumer-staples companies such as Pepsi and Mondelez fell. They didn’t take a terrible tumble: The sector as a whole was down only 1.6 percent. But if RFK Jr. does have an administration post, then processed food is a probable target of his “Make America Healthy Again” project—he already released a video going after a colored dye found in many kids’ foods. So it makes a certain sense that investors in those companies would be skittish about how his elevation might affect their business. This points to a certain tension in the relationship between Trump and RFK Jr.: The president-elect’s broad approach is all about deregulation, whereas Kennedy’s instinct is all about tightening regulation. Traders appeared to be betting that Trump’s tolerance for MAHA intervention will be limited.

All told, the markets remain fluid and dynamic, already showing signs that some investors have begun to reconsider their bets and unwind certain trades. (Interest rates, for instance, had come back down by Friday, in part because the Federal Reserve cut rates on Thursday.) Traders are, after all, trying to judge not only what a volatile, often distracted president is going to decide to do, but also how much his administration will actually be able to implement. The old line about Frank Sinatra comes to mind: It’s Trump’s world; traders just live in it.

The Federal Reserve on Thursday carried out its second consecutive interest rate cut, lowering the federal funds rate by a quarter-percentage point to between 4.50% and 4.75%.

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Donald Trump is heading back to the White House. He has inflation to thank.

In poll after poll, focus group after focus group, Americans said the economy was bad—and the economy was bad because prices were too high. This was always going to be a problem for Kamala Harris. “Excess” inflation—defined as the cumulative growth of prices in one presidential term compared with the term preceding it—is highly predictive of electoral outcomes, according to the Northwestern economist Robert Gordon. It is a crucial part of how voters decide whether they are better off and want to stick with the incumbent. The measure strongly pointed to a Trump victory. Indeed, since the global post-pandemic inflation spike began, ruling parties around the world, on the left and the right, have been toppled.

Still, before this week, Democrats had good reasons to believe that they might be spared the inflation backlash. Households’ spending power improved more and faster in the United States than in other countries. On paper, families were doing better than they were before the pandemic, particularly at the low end of the income spectrum. Real wages—meaning wages adjusted for prices—jumped 13.2 percent for the lowest-income workers from 2019 to 2023; real wages for the highest-income workers climbed 4.4 percent.

[From the April 2024 issue: What would it take to convince Americans that the economy is fine?]

But voters do not make their decisions at the polls on the basis of price-adjusted time series. Nor do they seem to appreciate pundits and politicians telling them that their lived experience is somehow incorrect—that they are truly doing great; they just don’t know it.

Prices spiked more during the Biden administration than at any point since the early 1980s. In some categories, they remain unsustainably high. Home prices have jumped an astonishing 47 percent since early 2020. This has made homeowners wealthier on paper, but has priced millions of people out of the housing market. The situation with rented homes is no better. Costs are up more than 20 percent since COVID hit, and have doubled in some places. The number of cost-burdened renters is at an all-time high.

In response to inflation, the Federal Reserve raised interest rates. Inflation statistics do not include the cost of borrowing, but many Americans experienced higher rates—the supposed cure for higher prices—as making costs worse. Mortgage rates more than doubled from their pandemic-era level, adding insult to home-buying injury. The interest payment on a new-car loan has grown nearly as much. Credit-card APRs climbed to all-time highs, making many families’ buffer against month-to-month earnings and spending changes a costly one. If you include the cost of borrowing, inflation peaked at 18 percent, not 9 percent.

When asked over the past few years about their personal financial stressors, however, voters mostly haven’t focused on housing or auto loans. They overwhelmingly brought up everyday purchases, above all the price of groceries and fast food. Food inflation outpaced the overall rate for much of the Biden administration; in 2022, when inflation was 6.5 percent, the price of groceries grew by 11.8 percent. The price hikes cooled off in 2023, but prices themselves remained far higher than Americans were used to: Margarine, eggs, peanut butter, crackers, and bread all cost more than 40 percent more than they did just a few years ago. That everyday indignity seems to be what made inflation so salient for voters. The mental math families were tasked with felt excruciating. The sticker shock remained shocking.

[Annie Lowrey: The worst best economy ever]

The optimistic story for the Harris campaign was that, after a year of subdued price growth, the American people would have gotten used to higher bills and appreciated the earning power they gained from the tight labor market. Instead, anger at inflation lingered, even among tens of millions of working-class Americans who had gotten wealthier. This is not a purely economic story; it’s a psychological one too. People interpret wage gains as a product of their own effort and high costs as a policy problem that the president is supposed to solve. Going to the polls, voters still ranked the economy as their No. 1 issue, inflation as the No. 1 economic problem, and Trump as their preferred candidate to deal with it. In interviews, many voters told me they felt as if Democrats were gaslighting them by insisting that they were thriving.

Voters who expect Trump’s victory to herald a return to 2019 prices or relief from the cost-of-living crisis might be due for disappointment, though. Trump’s signature economic proposal of huge global tariffs would immediately raise the cost of household goods. And his promise to round up and deport millions of undocumented immigrants could create a labor shortage that would raise the cost of food, construction, home health care, and child care. He has offered no serious plan to address the deep, tangled problems that have made a middle-class life so unobtainable for so many Americans. Those problems preceded the Biden administration, and they will outlast the second Trump administration too.