When Donald Trump was first elected president of the United States in 2016, financial assets experienced high volatility. Logic: the Republican’s victory was a total surprise, and his program was so vague that financial experts did not know which foot to stand on, nor which assets or sectors to bet on. Today, it is much clearer. Trump 2 has a precise agenda, and we can easily identify the winners and losers of his policies.
The stock markets were not mistaken: as soon as the results were announced, all investments qualified as “ Trump trades » flew away. But what are these assets and sectors, and how can you invest in the world of Trump 2?
Simplify investing with ETFs
America first ! Trump’s radically protectionist policy should clearly benefit American indices, while other zones, Europe and China in the lead, risk suffering from new customs duties and other barriers. Overweighting the S&P 500 in your allocation therefore seems judicious, especially since by investing in American stocks you benefit from another “Trump trade”: the dollar. The greenback soared on November 6.
And if the dollar rises against the euro, this automatically increases the value of your investments denominated in this currency: American stocks or bonds, commodities like oil or gold. But be careful if you are considering investing in American debt: it seems prudent to favor short maturities: Trump’s policy, especially the planned tax cuts, risks worsening deficits, debt, and therefore debt rates. long-term interest. If rates rise, it is better to avoid bonds with long maturity, to be able to reinvest when rates have risen significantly.
America first ? Not quite… Not all sectors will benefit from the new policy: green energies and the pharmaceutical industry risk seeing their subsidies and aid decrease, and perhaps even taxes increase. As for the infrastructure sector, he would probably have clearly preferred a continuity of Biden’s policy with Harris.
Save, invest… and reduce your taxes
The sectors favored by the new president? Here again, they are clearly identified: fossil fuels, with the presidential desire to strengthen energy independence, the financial sector with deregulation, and real estate, a sector well known to the former business magnate. Finally, for investors hungry for risk and speculation, two other “Trump trades” stand out, risky but potentially very profitable: cryptocurrencies, firstly.
Unlike in 2016, Trump declared himself favorable to the sector, like most Republican elected officials, unlike the Democrats, who advocate more regulation. The day after the election, bitcoin reached a historic record above $75,000. The other blow to play is the value of Tesla, whose boss, Elon Musk, a major supporter of Trump, is tipped for a key role in Washington. Tesla, despite its image as a flagship of green energies, soared when the results were announced. But neither Trump nor Musk are close to a paradox…
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