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Trump Victory a Big Win for Cryptos, Small Cap Stocks — USD?AI-generated image of Donald Trump as 'roaring bull' with US dollar backdrop

Trump Victory a Big Win for Cryptos, Small Cap Stocks — USD?

Published November 7, 2024

Losers include all things renewable energy, bonds, China, and (for now) gold…

This post was originally published the morning of Nov. 6, 2024 in the Daily Contrarian.

The election is over. Trump won. That is going to have broad impacts, not all of which are apparent yet.

AI image of Donald Trump as raging bull against US dollar backdrop

The immediate impact of Trump’s victory appears to be a broad move to the riskiest of risk assets. Cryptos being Exhibit A. Small caps are forging ahead. You also have Tesla (TSLA) soaring overnight. Meme stocks are up too, but less.

The losers include all things renewable energy, with solar stocks taking it on the chin overnight. The Invesco Solar ETF (TAN) is down 9% at the time of this writing. Big oil, on the other hand, is gaining ground with Exxon Mobil (XOM) and Chevron (CVX) up 3% each at the time of this writing.

Financials are winners as well. Not just big names like JPMorgan Chase (JPM) and Bank of America (BAC) but regional banks. The SPDR S&P Regional Banking ETF (KRE) is up 8% overnight.

Another loser: China. The iShares China Large-Cap ETF (FXI) is down 2%+. Names like Alibaba (BABA), JD.com (JD) and PDD (PDD) are moving lower.

All That Glitters…

Just keep in mind that the immediate reaction to political events is not always the right one. In 2016 at this time there was a broad sell-off. One can expect things to be volatile, especially as retail investors take short-term gains…

That brings us to a first possible opportunity. There has been a pullback in gold overnight, a likely result of the ‘strong dollar’ trade ushered in by this Trump victory. There are three problems with this trade, however:

  1. Trump has railed against USD strength;
  2. Trump’s policies are widely expected to be inflationary. You’ve seen the resulting sell-off in bonds. That means a weaker USD;
  3. The Federal Reserve is cutting rates, which is also bad for the USD.

One would expect all of this to, in time, be good for gold. During Trump’s first term the precious metal rallied by 55%. Past performance is not always a guide to future results, but gold tends to do well under Republican administrations (+215% in eight years of George W. Bush).

Make no mistake, though: gold has been on a massive tear all year and only recently pulled back from all-time highs:

Still, if gold keeps dropping it may present a buying opportunity keeping items 1-3 above in mind.

Full disclosure: The Contrarian owns some physical gold as well as SPDR Gold Shares ETF (GLD) in a retirement account.

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Fed’s Next Move, Trump 2.0, Opportunities in AI, Argentina (Szn 6, Epsd 15)Podcast episode cover art featuring James Fishback

Fed’s Next Move, Trump 2.0, Opportunities in AI, Argentina (Szn 6, Epsd 15)

Published September 10, 2024

With James Fishback, Azorio Partners

James Fishback, founder of Azoria Partners, joins the podcast to discuss the Fed’s shift in monetary policy, opportunities afforded by another Trump administration, why AI hype is real, and a host of other issues.

James Fishback, founder of Azoria Partners, joins the podcast to discuss the Fed’s shift in monetary policy, opportunities afforded by another Trump administration, why AI hype is real, and a host of other issues.

This podcast was recorded on Sept. 4 and was being made available to premium subscribers that same day. More information about premium subscriptions is available here.

NB: The guest is outspoken on certain political beliefs discussed here. These views are not necessarily shared by the host or the Contrarian Investor Podcast more generally.

Content Highlights

  • The Federal Reserve is expect to cut 200 basis points off of interest rates when all is said and done. The reality should fall well short of that measure… (1:37);
  • The US is economy growing in aggregate. Pain points are felt among lower socio-economic classes (4:44);
  • The major change will not come from a major shift in monetary policy but what happens fiscally, with the November election (9:16);
  • How to trade a Republican sweep? There’s an acronym: T-R-U-M-P (10:54);
  • Many companies have taken advantage of cheap labor supplied by illegal immigration. Their stocks will suffer once this is rolled back… (15:31);
  • AI is real. Productivity gains will be massive (17:44);
  • Crypto discussion. The best opportunity for bulls may to bet on lower volatility for Bitcoin… (22:47);
  • Background on the guest (28:33);
  • Azoria’s first ETF will be called the Meritocracy Fund. The strategy (33:38);
  • Another opportunity: Argentina (43:18)

More Information About the Guest

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Investor Confidence Is Fast Approaching ‘Invulnerable Extremes’ (Szn 5, Ep 19)Cover Art: Contrarian Investor Podcast Season 5 Episode 19

Investor Confidence Is Fast Approaching ‘Invulnerable Extremes’ (Szn 5, Ep 19)

Published July 27, 2023

With Peter Atwater

This podcast episode was made availableto premium subscribers on July 25 without ads or announcements. There are many other benefits to being a premium subscriber. Sign up through Supercast or our Substack.

Peter Atwater joins the podcast to discuss the ideas from his latest book, “The Confidence Map: Charting a Path From Chaos to Clarity.” Crucially, he tells listeners why investor confidence is today fast approaching the ‘invulnerable extreme’ that indicates a top in markets…

Content Highlights

  • Investor preferences change dramatically with their confidence levels. Generally high confidence corresponds to preference for abstract items (NFTs, cryptos) whilst low confidence yields a preference for more practical things (2:48)
  • Yes, magazine covers can be a reliable contrarian indicator (5:52);
  • Investor confidence levels are rapidly approaching the ‘invulnerable extreme’ with AI hype and a bull market for luxury goods (10:08);
  • How to deal with the question of timing, and signs to look for when seeking to identify a top (15:17);
  • When it comes to cryptos, the most recent mania has passed and the prospects of another round is remote (18:16);
  • Background on the guest (24:10);
  • Investor mania is not defined so much by overconfidence but invulnerability (27:37);
  • Where does this leave investors in terms of asset allocation? Introducing ‘sentiment diversification’ (30:08);
  • Natural gas may be at an inflection point that presages a really (32:19).

More From Peter Atwater

Not investment advice.

Quick Video Highlights From Our YouTube Channel

MoreInvestor Confidence Is Fast Approaching ‘Invulnerable Extremes’ (Szn 5, Ep 19)
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