Three angles of the "Trump Trade": key traits and early strategies

The "Trump Trade" has emerged as one of the key themes in market speculation, particularly after Republican candidate Donald Trump was viewed as a strong contender for the next U.S. presidency following a shooting incident.

However, the dynamics shifted when President Biden announced his withdrawal from the race, paving the way for current Vice President Kamala Harris to become the new Democratic presidential candidate, thus adding an element of uncertainty to the election. According to the RCP poll as of September 2, Trump's probability of winning stands at 46.2%, trailing behind Harris's 48.1%.

In the coming months of September and October, the presidential candidates will participate in key debates to showcase their policies, which could influence the election.

In this article, we will outline three major directions of the "Trump Trade" and their respective characteristics.

Trump-linked stocks

There are few stocks with a clear commercial association with Trump or close ties to his political activities. The main ones are Trump Media & Technology Group (DJT), Phunware (PHUN), and Rumble (RUM).

1. $Trump Media & Technology (null)$: This is Trump's social media company, of which he still holds a 60.4% stake as of July this year. DJT is the parent company of the renowned "Truth Social," and is broadly seen as the most quintessential Trump-related stock. After the Capitol Hill riot in early 2021, Trump's Facebook and Twitter accounts (the latter now rebranded as X after being acquired by Musk) were banned for "inciting violence." Trump then turned to his own platform, Truth Social. Even after the shooting incident, Trump posted an update on Truth Social.

2. $Phunware (null)$: The company provided mobile app development and data analytics services for Trump's 2020 presidential campaign. It developed the "Trump 2020" app for interacting with supporters, sending notifications, organizing events, and collecting data.

3. $Rumble (null)$: Similar to DJT, Rumble attracts many conservative users and Trump supporters discontent with mainstream social media platforms' content moderation. Rumble also collaborates with DJT, providing video hosting and streaming services.

All three companies are currently unprofitable and have relatively small market capitalizations. They all exhibit significant stock price volatility, possessing certain meme stock attributes.

As of the close on July 15, DJT has a market cap of around $8 billion, Rumble around $2 billion, and Phunware less than $50 million.

Policy beneficiaries

While there are few stocks directly associated with Trump, we could identify sectors likely to benefit from his campaign policies.

Trump's policy positions are marked by a clear conservative stance, emphasizing "America First". They include economic protectionism, strict immigration controls, tax cuts, deregulation, and a lukewarm attitude toward clean energy development.

Based on these policy directions, moomoo has compiled a list of some Trump-Election stocks$Donald Trump (BK22962)$ for users to consider.

U.S. domestic raw material producers and manufacturers stand to benefit, and as bargaining chips in trade negotiations, domestic agricultural sectors may also see a boost.

Banks, Insurance companies, and the Biotech industry could benefit from a more relaxed regulatory environment. Oil and Gas companies are likely to gain from a switch to traditional energy.

Stocks benefiting from policy changes span multiple industries, and the impact on stock prices may not be as direct as Trump-linked stocks. Users might need to wait for policy implementations to observe the effects on specific industry earnings.

New trade ideas: Tesla and Cryptocurrencies

Even though $Tesla (TSLA.US)$ isn't part of the traditional energy sector and could face unfavorable policies from Trump, it has still become a part of the 'Trump Trade.'

Following Musk's public endorsement, Tesla's stock saw an upward trend post-Trump's shooting incident.

Cryptocurrencies also received a boost from Trump's influence. Earlier, Trump confirmed his attendance at the Bitcoin conference at the end of this month, where he is expected to deliver a speech. Following the shooting incident, the event organizers reaffirmed his planned appearance.

In May, Trump's campaign team announced that they would accept donations in Bitcoin, Ethereum, and other cryptocurrencies, reflecting Trump's increasingly positive stance towards digital currencies.

As a result, cryptocurrency-related stocks like$Coinbase (COIN.US)$ and$MicroStrategy (MSTR.US)$ have surged.  

Market performance indicates that Trump-related stocks and digital currencies are highly sensitive to election developments, exhibiting greater volatility and responsiveness.

Moreover, there are some ETFs worth noting, such as the American Conservative Values ETF$Etf Opportunities Tr Amern Conservative Values Etf (ACVF.US)$ and the Point Bridge America First ETF$Point Bridge America First ETF (MAGA.US)$.

For instance, the Conservative Values ETF avoids investing in companies that support the Democratic Party's liberal agenda and has achieved notable returns since the end of 2022.

If Trump ultimately returns to the White House, these related investment products are potentially to perform well.

Source: moomoo. Data as of market close on July 15, 2024. The company mentioned is for illustration purposes only, and any statement involved does not constitute investment advice.

As the Republican Party officially nominates Donald Trump as their presidential candidate on Monday, Trump also announced his running mate—Senator from Ohio and author of "Hillbilly Elegy," James David Vance (J.D. Vance).

Vance's holdings have become a focal point for the market. Data shows that his portfolio is primarily composed of large-cap index funds, holding the Nasdaq 100, S&P 500, and Dow Jones index funds, each accounting for 24% of his investment portfolio.

His other investments overlap with concepts associated with the "Trump Trade," including a 6% stake in the Fidelity Bitcoin ETF $Fidelity Wise Origin Bitcoin Fund (FBTC.US)$ and Rumble$Rumble (RUM.US)$ respectively. He also has investments in gold and oil ETFs.

Risks associated with the "Trump Trade"

Although Trump currently holds an advantage, nothing is set in stone with more than three months remaining until the U.S. elections.

Particularly, Trump-linked stocks might experience significant volatility. Investors might devise strategies based on the distinct characteristics of different segments of the "Trump Trade."

Additionally, Trump's anticipated tax cuts and loose monetary policies could potentially reignite inflation, negatively impacting market performance.

As Trump's chances of winning increase, the market has started to price in inflation risks. Recently, yields on long-term bonds have risen despite easing inflation, signaling concerns about long-term inflation prospects.

In summary, while Trump's potential return to the White House has created various opportunities in the stock market, it also comes with notable risks. Investors should carefully consider these factors when planning their investment strategies.

Additional Disclosures: This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, opinions or forecasts provided herein will prove to be correct.