Editor’s Note: As we gear up for the inauguration, I wanted to bring attention to an insightful article from Shah Gilani at Manward Press discussing five sectors that might thrive with Donald Trump back in office. Shah’s track record from the 2016 election is impressive—he anticipated the impact Trump would have on the market. When he speaks, I make it a point to listen.
For more of Shah’s insights, click here.
– James Ogletree, Managing Editor
When we’re talking about trading and investing, elections do much more than choose leaders—they set market trends ablaze or put them on ice. That’s precisely why Wall Street had its eyes peeled on the recent presidential election, poised for another potential market shake-up.
Back when Trump first won in 2016, the market initially shuddered before shooting through the roof. On election night, Dow futures plunged by 800 points as traders held their breath, only for the market to switch gears and race ahead on a historic bull run, with the Dow climbing a remarkable 56% through 2019.
With Trump now eyeing a second term, savvy investors are already bracing themselves for what could be another rollercoaster.
The Deregulation Spark
During Trump’s first term, the financial sector got a significant boost as he cut through the post-2008 financial regulations, especially gutting parts of Dodd-Frank. Major Wall Street players like JPMorgan, Goldman Sachs, and Citigroup felt liberated from restrictive capital rules, allowing a burst of lending and trading activities that propelled their stocks to impressive heights.
Record profits weren’t far behind, as compliance costs dropped and banks gained more lending leeway. Trump’s return might spark another wave of deregulation, especially as banks grapple with the upcoming Basel IV requirements.
His pro-market strategy could lead to postponing or softening these rules, giving financial stocks yet another leg up. Greater capital freedom could see banks fueling market growth even more, providing investors with a fresh chance to ride the financial sector’s upswing.
Crypto’s Wild Ride
During Trump’s first term, cryptocurrencies took an exhilarating journey—remember Bitcoin’s rocket to $30,000 from a mere $700? This might just be a taste of what’s to come.
Initially wary of crypto, word on the street is Trump may be reconsidering his stance in his second term. Institutional investors yearn for solid regulations, and Trump could be the one to provide them.
Favorable policies might lead to a regulatory environment that embraces innovation while allowing crypto assets like Bitcoin, Ethereum, and new tokens to flourish. If regulation becomes clear, the digital asset market could ignite overnight. But this isn’t just about price leaps—it’s about cementing the legitimacy of an asset class that’s been waiting for its moment.
Infrastructure plays in cryptocurrencies, like exchanges, custody solutions, and blockchain firms, could truly flourish as institutional investments flood in.
America’s Industrial Revival
Trump’s earlier deregulation efforts triggered a booming American energy sector, transforming the U.S. into an energy giant. His second-term policies might ramp things up further, with his “America First” mantra sparking growth across various sectors:
- Oil and gas exploration could accelerate with easier permitting and fewer production hurdles.
- Large-scale infrastructure projects—think highways and power grids—could see rapid development.
- Construction and materials companies could benefit immensely from government contracts.
- The manufacturing sector, particularly in strategic areas, could see a resurgence.
- Transportation and logistics innovations, including expanded ports and upgraded railways, might take center stage.
It’s not just about constructing bridges. It’s about revitalizing America’s industrial core, presenting a treasure trove of opportunities from basic materials to cutting-edge construction technologies. Look for firms with substantial government contracts and solid domestic supply networks to pave the way.
Playing the Fed and Inflation’s Wild Card
Trump’s first term was buoyed by pro-growth strategies and easy money policies. This makes his influence on the Fed’s interest rate and inflation policies intriguing for a potential second term. Should he maintain an agenda focused on growth via tax cuts and deregulation, the Fed may adopt an accommodative monetary policy. Low interest rates could benefit technology, housing, and continue propelling consumer spending.
But investors need to be on the lookout for signs of inflation. When economic growth meets deregulation and hefty spending, precious metals and commodities often emerge as top hedges. In such a climate, assets like gold, silver, and industrial metals typically shine, whereas real estate often finds favor during inflationary periods.
Where to Place Your Bets
A Trump return could spark a perfect storm in various sectors, much like his 2016 win did. Here are five areas ready to take off:
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Financials: With fewer regulatory chains, bank stocks could soar as they enjoy more freedom in lending, trading, and investing.
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Crypto: Clear-cut rules could trigger a frenzy among institutional investors, benefiting cryptocurrencies and their supporting infrastructures.
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Energy: The regulatory ease might rejuvenate American oil and gas producers, especially those with robust domestic operations.
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Infrastructure: An “America First” policy suggests a building boom, providing opportunities across the construction and materials supply chain.
- Commodities: The growth of spending habits could stoke demand for raw materials, while fear of inflation pushes precious metals upward.
Trump’s potential victory could set off waves of opportunities across these sectors, notwithstanding the bumps along the way. Those who keep a keen eye on his policy directions and the shifting financial landscape could capitalize on an impending market wave. Wall Street is not just watching but eagerly waiting, knowing another Trump win could be the catalyst for a historic bull market run.
