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 e mail inboxes will now not be stuffed with election predictions.
As with the previous election cycles, I count on some market volatility regardless of who wins.
That’s as a result of large traders will begin to wager on what industries will flourish and who will wither below the brand new administration.
And this might come earlier than later.
Right here’s a chart from The Economist that exhibits an extended delay in election outcomes are outliers:
Frankly, I don’t 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 larger 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 tendencies that can proceed regardless of who wins:
The AI Growth: In fact, the market has been led this yr by the factitious intelligence growth which can proceed below both administration.
Mega-cap tech firms are spending a whole bunch of billions in an AI arms race. There are not 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 after AI is absolutely developed within the heart, it’s going to lead to an enormous improve cycle on the “edge”. I imagine it will result in a renewed improve cycle in client know-how, as our gadgets must be quicker to run superior AI computation.
The Transportation Revolution: The best way 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. Underneath Harris, present EV incentives will keep. And I believe the Trump / Elon Musk alignment means they’ll seemingly keep below Trump as effectively.
Not solely are EVs persevering with to seize market share, however we’re rushing 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 Could! 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 numerous firms set to debut subsequent yr. Neither president goes to derail this know-how, and I believe 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 site visitors.
The Renewable Revolution: Most analysts are getting this fully improper. They suppose it’s easy: Trump equals oil growth, Harris equals inexperienced vitality surge. However there’s a plot twist no one’s speaking about.
The numbers inform an surprising story. Underneath Trump, vitality shares plunged 40%. Underneath Biden? They rocketed up 105%. However don’t let these figures idiot you — they’d 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 facility investments on the road. A Harris win retains that momentum going. A Trump win? These investments might freeze quicker than a winter storm in Texas.
However I don’t see that occuring — Trump gained’t reduce these manufacturing facility 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 a substitute of fossil gas era, batteries discharge electrical energy saved in the course of the day.
That is going to proceed regardless of who’s president!
The Crypto Revolution: Everybody is aware of the SEC has come down laborious on crypto operators below the Biden administration.
And the excellent news — below both administration it will 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 alternate (which didn’t achieve this effectively).
Furthermore, he promised to fireside crypto boogeyman and SEC Chairman Gary Gensler and defend bitcoin miners.
Whereas Trump is crypto’s favourite candidate, Harris guarantees a special method than Biden — though we haven’t heard a lot total.
Harris informed donors at a fundraising occasion that she would encourage development within the digital property house.
The marketing campaign additionally tapped billionaire and crypto fanatic Mark Cuban, who mentioned that Harris was “much more open” than Biden.
The larger story right here is that regardless 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 Warfare 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 unfavorable), it’s nonetheless working at an all-time excessive.
To eliminate the debt overhang, governments both need to 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 laborious property — gold, commodities, actual property, and many others.
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 as a consequence of extra printing.
Whereas a Trump win may result in an instantaneous spike within the worth of bitcoin, this long run pattern goes to occur regardless 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 enormous trade transformations, not marketing campaign guarantees.
Till subsequent time,
Ian King
Editor, Strategic Fortunes
