From Stocks to Bitcoin, Trump Trade Erupts All Across Markets

The 2024 U.S. presidential election has sparked a wave of market activity, with investors betting on a potential 'Trump trade' resurgence. As former President Donald Trump gains ground in the polls, markets are reacting, with stocks, bonds, and cryptocurrencies all feeling the heat. This article delves into the dynamics of the 'Trump trade,' its impact on various asset classes, and the geopolitical factors driving market volatility.

The 'Trump trade' refers to the view that less regulation, lower taxes, less immigration, and higher tariffs could benefit certain sectors and industries, with important implications for inflation and bond yields. Since 1950, U.S. GDP growth has averaged 3.2% annually, and the S&P 500 has compounded at 9.4% per year. However, elections can introduce short-term volatility, and most investors currently perceive Trump to be the favorite to win the White House.


In 2016, Trump's victory was a surprise, but investors quickly embraced the prospect of corporate tax cuts and pro-growth policies. The first 'Trump trade' was characterized by small caps outperforming large-cap equities, the energy sector surging, and Treasury bond yields rising. As election results roll in, markets are reacting to the perceived likelihood of these policies, with the Trump trade surging when Trump is favored and retreating when Harris gains ground.

The 'Trump trade' has significantly impacted the volatility and correlation between different asset classes. Since Trump's election in 2016, stocks, particularly small caps and energy, have outperformed, while bonds and cryptocurrencies have also seen increased volatility. The Trump trade's impact on volatility is evident in the S&P 500's performance, with numerous record highs and firms like Nvidia achieving significant valuations. However, the Fed's cautious approach to interest rates and volatile oil prices pose potential risks to the bull market.


Geopolitical factors, such as trade wars and international relations, have significantly contributed to the 'Trump trade' and its impact on global markets. The Trump administration's protectionist policies, including tariffs on steel and aluminum and a full-blown trade conflict with China over intellectual property, have been identified as the biggest tail risk by fund managers. These measures were feared to have serious economic consequences, including increased inflation, reduced consumer spending, and disruptions in global trade. The signing of a Phase One trade agreement between the U.S. and China in January 2020 did not resolve these tensions, as most tariffs remain in place.

Market participants have adapted their strategies to capitalize on or mitigate the 'Trump trade,' with hedge funds and retail investors adjusting their portfolios based on election sentiment and other economic factors. Some hedge funds have increased exposure to sectors like energy and finance, anticipating regulatory changes under a Trump administration. Meanwhile, retail investors have been piling into bitcoin and gold, seeking safe havens amid uncertainty. However, many investors remain cautious, keeping a close eye on the election results and their potential impact on markets.

In conclusion, the 'Trump trade' dynamics have significantly influenced the performance of individual sectors and stocks within the broader market. As the U.S. election unfolds, investors are closely monitoring the results and their potential impact on markets. The 'Trump trade' has been associated with increased volatility and correlation between different asset classes, with geopolitical factors playing a significant role in driving market trends. As investors navigate the complexities of the 'Trump trade' and its impact on global markets, a balanced approach, considering both geopolitical events and economic fundamentals, is essential for capitalizing on opportunities and mitigating risks.