The general idea is to buy stocks in areas that will benefit from a Trump presidency and/or sell short stocks in areas that will tend to be hurt by a Trump presidency. I think the economic implications of a second Trump term are relatively clear, but the trade presumably carries with it both an assessment of the probability of a Trump win and one of the likelihood that Trump will hold to his campaign promises. During his time in office, for example, Trump failed to follow through on his pledge to shore up the country’s aging infrastructure. He did place tariffs on agricultural exports to China, but these mostly hurt the US, which lost business to South American competitors.
–It seems to me that one straightforward beneficiary of a second Trump term would be the oil and gas sector. Yes, he tried unsuccessfully to lower gasoline mileage standards when he was in office. But he seems to be saying that he would attack the other side of the coin–subsidies on the purchase of electric vehicles–during a second term. He would presumably also try to block the proliferation of charging stations. His deep ties with Russia and Saudi Arabia, both highly dependent on sales of oil and gas, and the immense amount of money his orbit has received from the Saudis in recent years (leaving the Clintons in the dust, as one domestic news outlet put it) argue that this would be a high priority
–real GDP growth comes from two sources, working population growth and increases in productivity (output per worker). In very rough terms, the maximum sustainable GDP growth in the US is about 2% per year, half each from increase in the number of workers and from productivity. Of new workers, maybe a third are immigrants. Something like three-quarters of all agricultural workers, a third of construction workers and a quarter of medical and science workers are immigrants.
Trump efforts to halt immigration, and to detain and deport immigrants already here, could easily, by itself, I think, clip 10%-20% off the trend rate of economic growth in the US. This would be an annual loss in GDP of about $125 billion.
It’s hard to compare growth under Trump from growth under Biden. The raw numbers say the Biden years have been much more economically fruitful, vs. close to zero for Trump. The pandemic was a major depressant during the Trump years, however, and I find it hard to separate the negative effects of the disease itself from the harm done by Trump’s decision to deny it was happening. My guess is that the second was worse than the first.
–one of the more striking aspects of Project 2025–a document Trump is now trying to distance himself from–is its proposal to return the Federal Reserve to its pre-Paul Volcker policies, which were heavily influenced by partisan political considerations (basically, money policy was loosened dramatically in presidential election years to aid the incumbent–Ford didn’t and was defeated–but never adequately tightened post election). This ultimately resulted in a half-decade of out-of-control, explosive inflation which reached 8% annually, with 11% in prospect, before Carter appointed Volcker to tame runaway price increases. Under Volcker the Fed Funds rate quickly rose to 21%, with short-term bank loans at 26% and the long Treasury at 20% before inflation began to come under control. It’s hard to imagine the damage to the economy, apart from that it would likely be 1970s-ish, if a Trump administration followed the Project 2025 playbook, written by his acolytes.
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