US Election Result: What A Trump Presidency Might Mean For Your Money

6th Nov '24 by Megan Boxall

28 comments 2916 reads

With Donald Trump destined to return to the White House in 2025 and Republicans on track to take the US senate, global markets have responded with a surprising jubilance.

Early gains in Asia (not China) were matched across Europe, with the FTSE All Share climbing almost 2% by 10am. The US futures markets are also buoyant - although that’s less of a surprise.

Top risers across Europe this morning

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This morning has also seen a surge in the price of Bitcoin to new highs, a strengthening of the value of the dollar against foreign currencies and an upward swing in the 10-year US yield curve.

Why the market response?

Some of this morning’s responses are grounded in the reality of what a Trump presidency will mean for global markets. A commitment to the use of cryptocurrencies, for example, goes some way to explaining bitcoin’s surge. Trump’s protectionist policies around US companies and a commitment to making it harder for the US to trade with China are the driving force behind the strong US futures markets (for both US large and small caps) and a decline in Chinese stocks.

And a rising US treasury yield is a direct response to Trump’s intention to increase the US deficit. His agenda involves material cuts to US taxes, which will decrease US government revenue. But there is no intention to taper spending, so borrowing is bound to increase.

But as for the response of other global markets, those are harder to explain. For a start, Trump’s policy is likely to be inflationary, which isn’t a great environment for any business attempting to sell to consumers. The fallout from rising yields in the US could also cross the Atlantic in time for the Bank of England interest rate decision, scheduled for tomorrow. If rates are not cut in line with expectations, UK markets are likely to react poorly.

It’s also surprising that UK large caps (which make substantial portions of their revenue in the US) are on the rise. Trump has already suggested tariffs of between 10% and 20% on goods sold in the US by non-domestic companies. The likes of Smith & Nephew, Bunzl and Ashtead (which make more than 50% of their revenue in the US market) could see some unpleasant additional…

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The Ox 2906

6th Nov '24

Thanks Megan, quick off the mark! I listen to the All-In podcast, basically a group of successful tech entrepreneurs chewing the cud, and a constant gripe from them this year has been the FTC and Linda Khan in particular, they’ve been very heavy handed with limiting M&A and letting the tech sector get on with change, this all has a knock on effect to the tech industry in spending and growth prospects, coupled with talk of tax increases. She’ll get moved on and someone more business friendly put in I’m sure, which should loosen purse strings and allow entrepreneurs to feel positive again, so spending should trickle down to IT and tech companies which have been hit this year.

dodge1664

interesting. I suppose the starting valuation of the stocks must have made a significant contribution

Mechanical Bull

It is quite ironic that inflation under Biden was probably the single most important reason for Trump's victory while his economic platform is basically a recipe for more of it. However, I am doubtful whether Trump will actually implement a blanket tariff system. It is not just that it would be inflationary, but also that countries will retaliate in ways that might be quite unpredictable. This happened during the first Trump presidency, with the Chinese targeting US agriculture exports. I think the whole tariff thing is a bit of an election gimmick for low information voters an most economists agree it is a terrible idea. I think it is more likely that tariffs will be used selectively as a form of leverage/blackmail to serve US interests.

Aislabie

As your response implies this election victory by Trump does not end uncertainty but actually increases it. Between now and January all sorts of mad possibilities will surface and given that there will be little or no restraint on wild ideas I think we are now being granted a “ head for the hills” moment before reality strikes.

Alphaflight

Mechanical Bull,

Yes I believe you are correct.

Alasdair Macleod pointed out a few weeks ago that the Smoot-Hawley Tariff Act which in 1930 crashed world trade and the US economy, events which led to a 40% devaluation for the dollar in January 1934. At that time, Federal debt to GDP was only 16.5%. Now it is 135%, which suggests that tariff protectionism today will have far more negative consequences for the US and global economies, upon which the dollar’s credibility depends, than did Smoot-Hawley.

Anyway for the time being, Mr Market has become "unburdened by what was" lol.

Babis DeGoogle

This comment has been moderated

bsharman

StrawberryDreams

Lina Khan even nixed the 'accessible luxury' handbag merger of the year between Capri Holdings (NYQ:CPRI) and Tapestry (NYQ:TPR).Unbelievable.Especially after her effect on the JetBlue Airways (NSQ:JBLU) Spirit Airlines (NYQ:SAVE) merger, with Spirit Airlines (NYQ:SAVE) fighting for survival now with an upcoming large 2025 debt maturity.

aflash

Indeed interesting Mr Agriculture,

(BTU) Peabody is sharply up and Fertilizer stocks (MOS) Mosaic and (CF) CF industries down slightly. (ADM) Archer up but reaction to sharp drop day before yesterday.

Incidentally something you asked a while ago about the US Trusts worth re-visiting in light of bright future for oil and gas. There are up-stream trusts (BPT was discussed) although the majority are midstream.

Could attach have some interesting stats if this thread accepted PDFs but you have your sources.

djlcollinge

Absolutely. Tariffs will drive up inflation as well. The had pressed consumer will not welcome this.

stockorocko

thanks Megan. Great writing and love your style.

Hi aflash,

Peabody could easily increase their dividend so perhaps that's what will happen...

I like Mosaic Co (NYQ:MOS) a lot. I also like Nutrien (NYQ:NTR). Note that Altius Minerals (TSE:ALS) own a lot of the key North American potash royalties. Circa 27% of the word's potash comes out of Altius' properties...

Yes Agriculture still getting hammered. I actually bought more Archer-Daniels-Midland Co (NYQ:ADM) yesterday as it is still on sale and the dividend is acceptable (also I expect them to grow the dividend over time as per their previous track record - my main reason for buying more). Note that I could definitely see ADM dropping further though as there are some issues over their account reporting etc. Right now is probably a good time to be adding to agriculture though as the sector is completely out of favor, I think you are the only other person I see here mentioning it - a good sign in my book as I'm a contrarian investor! As we know, fertilizer is correlated to natural gas prices and natural gas is cheap although up today I see. I still own a handful of the trusts but they are all underwater! I'd like to see Trump drop the Russian sanctions, I still have a few Russian fertilizer companies on MOEX through Interactive Brokers which are currently frozen, I have (or had??) a big position in PhosAgro, I followed Jim Rogers into that...

doctor dave

7th Nov '24

It appears to me and the Mises Institute, that most politicians are parasites and represent the worst of humanity, some more so than others, but on this occasion it appears that the markets and the world are relieved and hopeful that Trump will have a positive effect on the USA and the world. I am certainly happy with my portfolio since the announcement as I am sure many others are too.

You can't taper a Ponzi scheme as Max Keiser likes to say and far too many governments (in cahoots with Communist central banksters) have and do abuse their fiat currencies with QE (counterfeiting and money laundering) to fund their spending plans, reward their "friends" and rob their taxpayers through inflation (taxation by fraud) that they directly cause but then blame businesses for when they are forced to raise prices. Ideally, I would like to see a 99.999% reduction in the size of all governments in order to restore our prosperity and freedoms. We also need a return to sound money backed by commodities because governments are greedy parasites that have clearly learned nothing from the Weimar Republic nor Zimbabwe. We cannot expect Trump to fix all these issues overnight but hopefully he will make better progress than the other lot would have. Thank goodness we ourselves can each individually choose to invest in commodities to fight against the fraud perpetrated by our governments and the central banksters.

Nevertheless, despite the apparent positive outlook for our prosperity, I think we should all be wary and vigilant of globalists and politicians promising us something for nothing or to trade a little bit of our liberty for "safety" because there is inevitably always a sting in the tail, usually in the form of loss of liberty. Question everything. Always.

“The state is a parasitic institution that lives off the wealth of its subjects, concealing its anti-social and predatory nature behind a public-interest veneer.” - Lew Rockwell, Mises Institute

I love the capital gains and dividends from my coal shares in the US, South Africa and Australia. The reality is we need "fossil fuels" (hydrocarbons) because unless we want to go back to living in caves to "save the planet" then we cannot transition overnight to less energy dense renewable sources. Also, we do not have enough natural resources, especially copper, to build the renewable infrastructure required to replace all hydrocarbons and mining for these resources requires even more hydrocarbons. Besides, are wind turbines and solar panels really renewable? Are they not being dumped into landfill? Is cutting down CO2 (the gas of life, not a pollutant) absorbing trees and destroying farm land for less energy dense "renewables" really the answer?

I agree coal isn't going away any time soon and neither is oil, natural gas or uranium.

Hi BabisG,

" The reality is we need "fossil fuels" (hydrocarbons) because unless we want to go back to living in caves to "save the planet" then we cannot transition overnight to less energy dense renewable sources."

You are sounding like me here:-)

" Also, we do not have enough natural resources, especially copper, to build the renewable infrastructure required to replace all hydrocarbons and mining for these resources requires even more hydrocarbons."

Yes exactly, they have a fossil fuel as an input in some shape or form.

"Besides, are wind turbines and solar panels really renewable?"

Exactly, they are not. You can't build them without using fossil fuels and you can't maintain them without using fossil fuels. We are being led down the garden path by scientifically illiterate politicians. What could possibly go wrong over time I wonder...

By the way I liked your other comment about the parasitic .gov institutions etc - all true of course.

Hopefully Trump will manage to replicate the good things Sr Javier Milei is aiming to do in Argentina i.e. dismantle the bloated state and remove the apparatchiks!

Are you my twin brother / sister from another mother Alphaflight? ;-)

I would love to clone Javier Milei to become UK PM to take a chainsaw to the British swamp. :-) Argentinian companies are doing very well. Very well!

The realisation that governments are actually parasites comes from Mises, Doug Casey of International Man, Jeff Berwick of The Dollar Vigilante and Larken Rose.

If you like my thinking maybe take a look at Capitalist Exploits - Stockopedia complements their USA and Australian recommendations very nicely - what a great platform this is for helping private investors like us. I don't work for them but I am a very happy subscriber.

Thank you for the Capitalist Exploits link.

"I would love to clone Javier Milei to become UK PM to take a chainsaw to the British swamp. :-) Argentinian companies are doing very well. Very well!"

Yes, I was thinking sledgehammer but a chainsaw would be be better as you say :-)

"The realisation that governments are actually parasites comes from Mises, Doug Casey of International Man, Jeff Berwick of The Dollar Vigilante and Larken Rose."

I worked this out a long time ago. I'm a fan of the people you reference and I'm also a fan of the Austrian economics related Mises Institute. If only we had Austrian economists running the UK, instead sadly we have WEF candidates like Sir Keir!

I think the title of "Sir" has lost all its value when it comes to two tier keir.

US Election Result: What a Trump presidency might mean for your money

Why the market response?

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Megan Boxall

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