It has been my long experience that it’s a huge red flag when people want to talk about politics as a motive force in the stock market. Typically they have the lowest possible degree of skill and no usable information. Having said that, my political thoughts:
In contrast to his first term, Trump is moving fast and breaking things from the outset. This makes it harder to see the rhyme and reason behind what’s going on. But in the whirlwind, I see two themes:
–the insurrectionists who stormed the Capitol to prevent ratification of the 2020 election win by Biden have been pardoned. If news reports are correct, all the Justice Department lawyers involved in prosecuting the case that Trump masterminded this attempt have also been fired. It seems to me that the two actions–the loss of expertise and the loss of leverage over possible witnesses–make it all but impossible to resurrect the case after Trump leaves office, assuming he does so. The same, I guess, for the secret documents case, where the real issue, I think, isn’t where Trump kept them but whether he gave/sold the information to foreign powers.
–so far, there’s no coherent economic program. Tariffs against China, ex EVs, seem to be off the table for now, for example. “Drill, baby, drill” is an administration mantra, but yesterday Trump asked OPEC to lower the oil price–which would make drilling less profitable. Although the availability of electric power is a national issue, especially for data centers, Trump is ordering the shutdown of wind-generated electricity. He also somehow thinks that commercial banks have the power to lower interest rates.
My conclusion is that it’s going to be hard to make money by playing the typical domestic business cycle driven with the help of coherent and uniform government action. There is the possible bump from a reduction in the domestic corporate tax rate ahead, but after that I don’t have much to say. This leaves three areas, in my view: tech, multinationals and value stocks.