Winners and Losers Under Trump’s Second Term
Prof G Markets
Deep Dive
Why did Tesla's stock rise after the election result?
Tesla's stock rose due to investors believing it will benefit from Trump's administration, likely due to Elon Musk's relationship with Trump and the expected increase in tariffs on China, which would keep Chinese competitors like BYD out of the U.S. market. Additionally, the removal of EV subsidies could solidify Tesla's market leadership by hurting smaller, less established EV makers.
Why are bank stocks expected to perform well under Trump's administration?
Bank stocks are expected to perform well because of the anticipated rollback of financial regulations, leading to more mergers and acquisitions (M&A) activity and larger investment banking fees. Higher interest rates due to inflationary pressures would also increase the spread on loans, boosting bank profits.
Why are small-cap stocks expected to benefit under Trump's administration?
Small-cap stocks are expected to benefit because many of these companies are U.S.-centric, meaning their supply chains are less global and they do most of their business domestically. With Trump's isolationist policies and potential tariffs, there could be more investment in U.S.-based companies, benefiting small-caps.
Why did clean energy stocks decline after the election result?
Clean energy stocks declined because Trump plans to put renewable energy projects on hold, leave the Paris Climate Agreement, repeal the Inflation Reduction Act, and scrap offshore wind projects. These actions would harm clean energy companies and benefit fossil fuel companies.
Why are foreign stocks expected to suffer under Trump's administration?
Foreign stocks are expected to suffer because Trump's tariffs and isolationist policies could reduce exports to the U.S., which is a significant market for many foreign companies. For example, 13% of Germany's GDP comes from exports to the U.S., and companies like BMW and Volkswagen could see reduced sales.
Why are real estate stocks and the housing market expected to struggle under Trump's administration?
Real estate stocks and the housing market are expected to struggle due to higher mortgage rates resulting from anticipated inflation and increased costs of building materials due to tariffs. Additionally, immigration crackdowns could make the construction labor market tighter, further driving up costs.
- The market tends to overreact, creating buying opportunities for hammered stocks.
- A president with limited attention span may mean less drastic changes in sectors.
- Winners may not win as much, and losers may not lose as much due to the slow-moving nature of government changes.
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