It’s election day!
Exterior of electing a president, authorities and native officers, it additionally means the fundraising textual content messages will cease and our electronic mail inboxes will now not be stuffed with election predictions.
As with the previous election cycles, I anticipate some market volatility irrespective of who wins.
That’s as a result of large traders will begin to wager on what industries will flourish and who will wither underneath the brand new administration.
And this might come earlier than later.
Right here’s a chart from The Economist that reveals a protracted delay in election outcomes are outliers:
Frankly, I do not know who wins this race when all of the votes are tallied. However right here’s what I can report: The S&P 500 has climbed greater in 19 out of 24 election years.
As I’m typing this, the S&P 500 is up 21% for 2024.
Right here’s 4 mega traits that can proceed irrespective of who wins:
The AI Growth: After all, the market has been led this yr by the unreal intelligence increase which can proceed underneath both administration.
Mega-cap tech corporations are spending lots of of billions in an AI arms race. There aren’t any indicators of this slowing down. Morgan Stanley expects these hyperscalers to spend 25% extra on AI subsequent yr, which quantities to over $300 billion!
The important thing right here is that when AI is absolutely developed within the middle, it’s going to lead to an enormous improve cycle on the “edge”. I consider this can result in a renewed improve cycle in shopper know-how, as our gadgets should be sooner to run superior AI computation.
The Transportation Revolution: The way in which we get across the earth will undergo a dramatic change within the subsequent few years.
Globally, electrical vehicles accounted for round 18% of all vehicles offered in 2023, up from 14% in 2022 and solely 2% 5 years earlier, in 2018. Beneath Harris, present EV incentives will keep. And I feel the Trump / Elon Musk alignment means they’ll possible keep underneath Trump as nicely.
Not solely are EVs persevering with to seize market share, however we’re dashing towards absolutely autonomous automobiles. Google reported its autonomous unit Waymo is finishing 150,000 journeys per week.
That’s triple what the self-driving taxi firm was finishing in Might! Furthermore, Musk mentioned he’ll “in all probability” have his robotaxi on the roads in 2026.
Additionally, we’re on the verge of eVTOL (electrical vertical take-off and touchdown) journey with various corporations set to debut subsequent yr. Neither president goes to derail this know-how, and I feel they are going to be an enormous a part of the 2028 video games as athletes soar throughout Los Angeles over the dreaded rush hour visitors.
The Renewable Revolution: Most analysts are getting this utterly mistaken. They suppose it’s easy: Trump equals oil increase, Harris equals inexperienced vitality surge. However there’s a plot twist no person’s speaking about.
The numbers inform an surprising story. Beneath Trump, vitality shares plunged 40%. Beneath Biden? They rocketed up 105%. However don’t let these figures idiot you — that they had extra to do with international provide chains and pandemic restoration than political insurance policies.
You see, the clear vitality sector has $200 billion in new manufacturing unit investments on the road. A Harris win retains that momentum going. A Trump win? These investments might freeze sooner than a winter storm in Texas.
However I don’t see that occuring — Trump gained’t minimize these manufacturing unit investments as a result of it means reducing American jobs.
The renewable revolution is right here. Check out this graph of gas combine from California.
A lot of the state’s noon energy comes from photo voltaic. After which within the night, the batteries kick on when the solar goes down.
Batteries didn’t even exist 10 years in the past, and now as an alternative of fossil gas technology, batteries discharge electrical energy saved in the course of the day.
That is going to proceed irrespective of who’s president!
The Crypto Revolution: Everybody is aware of the SEC has come down arduous on crypto operators underneath the Biden administration.
And the excellent news — underneath both administration this can change.
Trump, as soon as a bitcoin skeptic, is a self-proclaimed crypto candidate. He’s even offered a number of units of his personal NFTs and supported the launch of a brand new decentralized finance change (which didn’t accomplish that nicely).
Furthermore, he promised to fireplace crypto boogeyman and SEC Chairman Gary Gensler and defend bitcoin miners.
Whereas Trump is crypto’s favourite candidate, Harris guarantees a unique method than Biden — though we haven’t heard a lot general.
Harris informed donors at a fundraising occasion that she would encourage progress within the digital belongings area.
The marketing campaign additionally tapped billionaire and crypto fanatic Mark Cuban, who mentioned that Harris was “way more open” than Biden.
The larger story right here is that irrespective of which candidate wins, the principle driver of bitcoin’s supercycle is right here to remain.
That’s as a result of the post-World Struggle V (Virus) world is awash in debt. Right here’s a chart that illustrates how that debt skyrocketed beginning in 2020.
Despite the fact that Debt to GDP has come down from the anomalous studying in 2020 (GDP was zero or destructive), it’s nonetheless working at an all-time excessive.
To do away with the debt overhang, governments both should develop their economies or inflate them by printing more cash. The latter is normally what occurs.
When more cash is printed to pay down debt, it results in an increase in arduous belongings — gold, commodities, actual property, and so forth.
This time, it’s going to result in a surge within the worth of bitcoin as international residents can defend their fiat currencies with digital currencies that may’t be devalued because of extra printing.
Whereas a Trump win would possibly result in a direct spike within the worth of bitcoin, this long run development goes to occur irrespective of who wins the presidency.
The underside line? Cease watching the political theater and begin following the cash. The true winners can be traders who place themselves for large business transformations, not marketing campaign guarantees.
Till subsequent time,
Ian KingEditor, Strategic Fortunes
