The S&P 500 and the Nasdaq 100 increased their capitalization by 2% in the first hour of Donald Trump’s electoral victory. The Dow Jones Industrial did so by 3.1%. While the Stoxx Europe 600 fell 0.6%, the Chinese stock markets fell in the same proportion as the American gains – with falls of 4% in the first stages of their technological indices – and the yuan joined the readjustment that the dollar was making. to the euro, the pound, the yen or the Mexican peso, among others.
For their part, cryptocurrency wallets, assets liked by the next tenant of the White House, which he has promised to deregulate instead of following the regulatory guidelines requested by central banks, displayed unbridled joy. Bitcoin immediately climbed 7.4%, to $74,248 per unit, and ether, 9.8%, to $2,652.
In parallel, the profitability of the 10-year Treasury bond, which reveals long-term investor confidence in the world’s largest GDP, rose 18 basis points, reaching 4.4%, which contrasted with the three-point drop in the bundle German, emblem of European stability, up to 2.40%, hours before Chancellor Olaf Scholz dismissed his Finance Minister, the liberal Christian Lindner, due to irreconcilable disagreements. And the value of Tesla – the automated vehicle factory of Elon Musk, the Republican leader’s economic guru – increased by 15% after Trump’s praise for the head of SpaceX and the old Twitter.
“He has character. He’s a special guy. A super genius […] and we must protect the geniuses because we lack their skills,” he said as soon as he certified his victory at the polls to corroborate that the richest person on the planet will be in charge of using the scissors to further reduce the American welfare state. ; with special passion for the cuts to subsidies of Bidenomics, the economic policy of his predecessor. X, the platform that now gives its name to Twitter, offered record usage records among social platform users.
So, are the markets right-wing? It seems to be in their DNA; although they later adapt to electoral cycles of different political signs. This is deduced from the impression of Mohamed El-Erian, president of Queens’ College of Cambridge: “Trump has achieved electoral and legislative support [con el dominio sobre las dos cámaras] broad enough to apply emergency to the structural productive change that it intends to establish.” Despite the fact that the scorecard insists on certifying that the US GDP continues to emit resilience to recession, full employment, controlled inflation and rising wages. That the barrel of crude oil remains stable while waiting for the White House to restore its support for the Old Fossil Economy is another vestige that the lobby oil company returns to Washington.
What works well, is it not touched?
Within hours, Biden’s successor confirmed the investment preference for conservative governments by obtaining a truce with which to justify, without alarm or urgency, his change of direction to stone “all help” from Bidemonics. Even with the Fed lowering rates. Following instructions from the Heritage Foundation, think tank ultraconservative that has provided trade protectionism and tax cuts in Republican programs since Ronald Reagan, and its Project 2025 express “radioactive measures” for Trump. As if industrial reconversion in the making to protect demand for supplies and raw materials or make chips made in US It would not require federal resources, like any preceding productive revolution.
Climate denialism and the doctrine that private capital, as the only one authorized to create and benefit from business cycles, will settle comfortably again in the White House.
“One of the reasons why markets generate wealth and distribute profitability is because of me.” Trump’s word at the end of his first term days before instigating the assault on the Capitol. Although the initial oscillation of the stock markets after a presidential contest in the US prevents us from seeing the stubborn reality. Natixis recalls that, since 1976, the profit of Wall Street under Democratic mandates was 14.3% compared to 10.8% under presidencies of the Grand Old Party (GOP).
In the absence of knowing the closing of 2024 to seal the evolution of the Biden legislature, which will hand over the keys to the Oval Office in January, the Carter-Clinton-Obama trident generated stock market increases of 14.9%, far from the 4.9% combined of the Reagan-Bush -father and son-, and Trump administrations. In 2023 the S&P 500 rose 21.9% and this year it records several capitalization records.
Good (economic) time to preside over the US?
Bidenomics and its subsidies have acted as fuel keynesian to propel activity in a business cycle of constant geopolitical threats, disruptions in value chains, commercial and logistical collapses and a competitive race for the technological scepter full of monetary, economic, labor and financial tensions.
Biden brought them into play, due to the demands of the Great Pandemic, in homes and companies and, when the fiscal stimulus came to an end, he transferred them to industry and renewable energies. Even so, the GDP sealed a minimal technical recession, with a contraction of 2% and another of 0.6% in the first and second quarters of 2022, coinciding with the Russian invasion of Ukraine. Although with four quarters above 5.2% and, therefore, its growth potential.
On average, Biden’s mandate boosted the economy by 2.8%, four tenths more than Trump’s journey and his deep tax cuts, and the same pace as that recorded by the GDP during the third quarter of this year, the latest data recorded. , just before the elections.
The Democratic legacy “leaves good economic omens,” highlights Julia Coronado, founder of the research firm MacroPolicy Perspectives. Despite which, the Republican leader wants to leave another dogma of faith of the GOP: more tax cuts and tariff battles to “redirect their effects on assets,” anticipates David Rosenberg, president of Rosenberg Research. In his opinion, the reformulation of MAGA (Make America Great Again), Trump’s political mantra, leaves a serious warning, because “it is still a prescription for steroids” that can generate a speculative bubble in American values ”with the consequent risk of an uncontrolled explosion.
In addition to creating “collateral damage in the US and the rest of the world” with its increases in import tariffs, says Nicolaos Panigirtzoglou, strategist at JP Morgan Chase. “Trump intends to turn measures that should be exceptional into structural ones,” they harm the free movement of goods, services and capital and can bifurcate globalization.
Some of these omens have already emerged. On the day of the Republican’s proclamation as the winner, the ten largest fortunes on the planet – including Musk, Bezos and Larry Ellison, CEO of Oracle – earned 64 billion, their largest daily stock market accumulation since 2012, when Bloomberg Wealth was launched. Index. The owner of Tesla alone increased his assets by 26.5 billion.
Trilogy of risks in the US and European and Chinese suspicions
Although the concern, apart from this paradigm shift, revolves around three specific aspects. The first, his radical turn in energy policy with the defenestration of Biden’s climate legacy, which he has described as a “scam.” Despite the “tremendous progress” driven by green and industrial Democratic action, highlights Professor Javiera Barandiarán, from the Center for Climate Justice at the University of California. The IRA and the Chips Acts – he says – increased sustainable investments by more than 40%, aimed at projects such as the Enel solar plant in Oklahoma – worth 1,000 million dollars -, that of LG Energy and Arizona (2,300 million) or the refinery of lithium from the Albemarle chemical company in South Carolina for another 1.3 billion.
Secondly, the declared intentions to interfere in the monetary sovereignty of the Fed that horrify experts but that Trump intends to make subject to the renewal of Jerome Powell’s mandate in 2025 to facilitate permanently low rates that can spur activity and hide blackheads of his future management as the double rise in the deficit and the debt, although they may provoke another inflationary spiral, the fictitious ghost that he raised to give the electoral finishing touch to the Democrats.
And, to finalize the trident, a deregulatory desire that will not precisely encourage monopolistic complaints against the businesses of the bigtechsas explained Financial Timesas Kamala Harris wanted to promote, and that will add more fuel to the “destabilizing” fire that, according to the IMF, is gripping the markets with its fiery defense of cryptocurrencies.
In Europe, Trump’s victory has coincided with the termination of the German tricolor government, to the satisfaction of the ascendant neo-Nazi party AfD, and the call for a motion of confidence in January that predicts an early election, the European locomotive seized, the euro again under the yoke of parity with the dollar and an emergency meeting of the Franco-German axis to weigh the return of the trumpism and its effects, more pernicious than in his first mandate, on the EU. Europe is also threatened with tariff increases and is required to increase military costs in a crucial phase to inject competitiveness with common financial resources and tools such as Eurobonds that include the diagnoses of Mario Draghi and Enrico Letta.
“More Europe” and economic, investment and security integration appear on an official agenda that would be altered if a far-right wave breaks out, driven by version 2.0 of Trump. “The EU will be subjected to an entire exercise in economic survival,” advances Aslak Berg, of the think tank Center for European Reform (CER).
Like China, whose GDP would drop two points annually with tariffs of 60%, the Macquarie fund calculates. As much as Beijing is “better prepared” to repel another tough trade battle and finalizes a second stimulus program of 1 trillion more yuan – almost $140 billion – that Goldman Sachs and HSBC advance that will be aimed at “recapitalizing” banks and real estate companies and restore the tranquility lost by their stock markets in 2024. Just during the American election week.
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