Trump vs. Harris: How to Get Ahead of the Game in the Election?

Insights – As the 2024 U.S. election nears, the race between Donald Trump and Kamala Harris remains highly competitive. With the much-anticipated "Trump Trade" and "Harris Trade" in full swing, investors are keen to understand how the election results might shape opportunities in the dollar, gold, U.S. stocks, and Bitcoin.

Harris Leads, Will Trump's Sympathy Surge Shift the Tide?

The U.S. presidential election is scheduled for November 5. Prior to that, Trump and Harris faced off in their first televised debate in September. Harris had previously erased Trump's lead, with her support rising quickly, temporarily shifting the balance in her favor. However, after two attacks on Trump, his sympathy surge has once again made the race unpredictable.

The election is set for November 5. Before then, the two candidates faced off in their first televised debate in September. Harris had previously erased Trump's lead, with her support rising quickly. However, after two attacks on Trump, his sympathy surge has once again made the race unpredictable.

Meanwhile, the Fed has cut rates, drawing investor attention to the uncertainty of the U.S. election. How will the candidates' policy proposals impact the economy?

Trump Trade" and "Harris Trade" in Flux

Trump and Harris clashed over economic policies, the Russia-Ukraine conflict, abortion rights, and immigration During their first debate.

Trump's second-term policy proposals have become a focal point for the market, covering issues such as interest rates, the Federal Reserve, government budgets, tax cuts, energy exploration, and crypto.

Assets likely to benefit from Trump's policies are dubbed the "Trump Trade" on Wall Street. UBS lists stocks tied to Trump Media, financials, oil, and manufacturing as potential winners. However, Nobel laureates and institutions like BlackRock warn a Trump victory could worsen inflation.

Furthermore, Trump's criticism of the recent rate cuts has sparked debate. He accused the Federal Reserve of "playing politics" by cutting rates close to the election and previously threatened to fire Chair Jerome Powell. The market now questions the Fed's independence under a second Trump term and the risk of rising inflation.

On the other hand, the market generally expects Harris to continue Biden's policies while incorporating her own advocacy, including increased government spending, corporate tax hikes, expanded clean energy investments, and tighter AI regulations. However, Harris' stance on crypto remains ambiguous.

The "Harris Trade" has also gained traction. The market expects sectors such as solar energy, clean energy, cannabis, consumer goods, and large multinational companies to benefit. Following the first debate, stocks related to Harris surged, while Trump-related stocks weakened.

Beyond U.S. equities, other financial assets are also likely to be impacted by the election.

How Will the Election Affect the Dollar, Gold, and U.S. Stocks?

Regarding key assets such as the U.S. dollar index, gold, the Nasdaq, and Bitcoin, Wall Street's major institutions have offered differing views:

• Gold

Bullish: Goldman believes that Trump's trade policies would benefit gold prices. Taiwan Bank also expects gold prices to rise regardless of whether Trump or Harris wins.

Neutral: Lobo Tiggre, CEO of IndependentSpeculator.com, argues that the election will not significantly affect gold prices, as past elections have not presented major opportunities for precious metals.

Bearish: Citi points out that the uncertainty surrounding the U.S. election could limit gains in metal prices.

• Nasdaq

Given Trump's recent interactions with the tech sector, the market believes that a Trump victory could positively impact the Nasdaq. The Information Technology and Innovation Foundation has stated that tech leaders are betting on Trump being more hands-off with AI regulation.

• Bitcoin

Bullish: Standard Chartered predicts that Bitcoin will surpass $100,000 around the election. Grayscale believes that if either party gains control of both the White House and Congress, Bitcoin will rally. Bernstein estimates that a Trump victory could push Bitcoin above $90,000.

Neutral: Bitfinex analysts believe the market has already priced in most expectations, and significant volatility is unlikely.

• Dollar Index:

Morgan Stanley, ING, and Deutsche Bank believe a Trump victory would support the dollar. Wells Fargo and Goldman Sachs suggest that a Harris win would lead to a moderate dollar decline. Moreover, Northern Trust predicts that the dollar could rise by another 5% before the election.

Overall, Wall Street generally expects that a Trump victory would lead to higher volatility in risk assets such as U.S. stocks, the dollar, gold, and Bitcoin, while a Harris victory would have relatively less impact on these assets.