Total victory for Trump. The calm before the storm?

Donald Trump’s total, unambiguous victory at least had the merit of avoiding a confrontation between Trump’s supporters and opponents. The market likes certainty. This political clarity has been reflected in the stock markets, which have been playing hard on the sectors and assets that will benefit from the new Trump era and selling the sectors that will suffer under his presidency.

We know the main points:

• Lower corporate taxes to 15% and eliminate federal taxes.
• Increase in customs duties (+20% for all imports, +60% for Chinese imports and +200% for vehicles imported from Mexico).
• Deregulation, particularly for the financial sector and energy, and support for oil production.
• End of illegal immigration and mass removal of illegal immigrants.
• Decline in the power of the central government and federal agencies.
• Exit from the Paris Climate Accords and end of green projects introduced under the Biden presidency.
• Relaxation of regulation on cryptocurrencies, Donald Trump even suggesting that bitcoin could appear in the Fed’s foreign currency reserves.

The end-of-year rally is expected to continue. Technically, the S&P 500 could enter the 6,100-6,300 zone. We would be tempted to gradually take our profits before the inauguration of Donald Trump on January 20. We are entering the unknown, not in terms of the measures that will be taken, but in terms of their consequences. Robert Jr Kennedy, the anti-vaccine, the anti-pharma, should have a role in health, Donald Trump signaling that he will be able to do what he wants – “go wild” – with regulation in pharma and food. Elon Musk should have a role in the economy and the organization of the federal government. Donald Trump said Elon Musk was a great cost-cutting expert. Elon Musk endorsed Donald Trump’s idea of ​​presidential intervention in the Fed’s monetary policy. Other billionaires could enter the new government or take on an advisory role. The risk of conflicts of interest is enormous. Donald Trump is appointing people to important positions, such as defense, attorney general, intelligence, who even shock many Republican elected officials, while Trump has asked Congress not to go through the required box for congressional approval.

Would we return to the spirit of the American Constitution of the founding fathers, George Washington, James Madison, John Adams and Alexander Hamilton who wanted to restrict central power for the benefit of the States and citizens? Let us remember that the United States finds its origins in European colonization, made up of men and women first fleeing “tyrannical” European central governments.

In terms of trade wars and geopolitics, the situation is much more complex than in 2016. The Ukraine war and the Israel-Iran conflict have become entrenched. Donald Trump wants to destroy Iran, but the BRICS have become stronger with the entry of Iran. Russia, China and Iran are allies. Donald Trump likes Putin and to indirectly help Putin, he could be more aggressive towards Europe, which could be the weak link.

Potential winners:

• US banks.
• Mergers & acquisitions. Wall Street complained about restrictive anti-trust regulations. Traders believe that more flexible legislation would be more favorable to mergers and acquisitions, particularly in the pharmaceutical and US regional banking sectors.
• Fossil fuels, particularly liquefied gas.
• (Semi)finished industrial metals, such as steel, aluminum.
• Electricity producers.
• The defense sector.
• The Russell 2000.
• Specific Trump-proxy cases like Tesla, Trump Media & Technology, Phunwarre, Rumble, GM, Ford, Coinbase, MicroStrategy, …
• The bitcoin.

Potential losers:

• US and European pharmas on the American market in research & development and prices.
• American and European companies in consumer discretionary (luxury, cars), food and beverages in a trade war.
• Renewable energies.

Last week, the green theme was the biggest loser with dizzying falls for certain stocks: -56% Sunnova (storage batteries), -40% Sunrun (solar panel management), -28% SolarEdge (inverters), -26% Enphase (inverters), -26% Canadian Solar (solar panels), -10% First Solar, -12% Vestas Wind, -10% Nextracker, etc… Donald Trump said that he wanted to dismantle green projects subsidized by the federal government. This correction is exaggerated, but we will stay away from small and medium-sized green companies as long as we do not have concrete decisions from the new future government and we will favor large companies in electrification and infrastructure.

Pending the arrival of Donald Trump, the current government has strengthened measures limiting the export of Western technologies to China, particularly in AI, threatening American national security. These new rules will also affect investments in listed Chinese companies considered critical to American security. The House Select Committee on China criticized major U.S. index providers for steering billions of dollars from U.S. investors into shares of Chinese companies that the U.S. says facilitate the development of China. Chinese army. The US has just notified TSMC of a ban on selling certain chips used in applications using AI to China.

Fears were palpable last week with the (very) supportive politeness of European and Chinese leaders. No panic on board, but almost. German Chancellor Olaf Scholz dismissed the finance minister who wanted to maintain German orthodoxy on spending, while Scholz advocates more spending to revive the economy. The possible deregulation across the Atlantic in the banking sector has caused Switzerland and Great Britain to react for legislation adapted to the new competitive environment coming from the United States. NATO is also worried, especially since the announcement of a Fox News commentator as Secretary of Defense!

The Bitcoin

Bitcoin celebrated Trump’s victory with a 40% increase to $93,000. Donald Trump’s campaign was pro-bitcoin and the people who will join the next government directly or indirectly are either pro-bitcoin or holders of large quantities of bitcoins. By analyzing the behavior of bitcoin before and after each halving, an intermediate peak is expected in October 2025 between $150,000 and $200,000.

As for gold, it is not currently part of the Trump trade. On the other hand, it is an asset to hold in a world more uncertain and indebted than ever. After a pause in 4Q24, the price of gold is expected to rise again in 2025.