Trumponomics is already shaping investor and trader portfolios as a Trump landslide win in the November presidential elections has been accepted as a virtual certainty even by the mainstream.
Former President Trump is currently racing ahead to retake the presidency in the wake of the July assassination attempt, which came within millimetres of ending the (former) president’s life.
Nearly one-third of Americans believe Trump was the real winner of the last election, who many refer to as their president. So, for millions of Americans, this brings back the turbulent 60s period of civil unrest leading to the JFK assassination.
Trumponomics, in an election campaign resembling a battleground
It is not your typical election campaign, appearing more like the prelude to a Civil War 2.
A cocktail of high-octane ingredients is already in the mix with partisan politics, partisan judiciary, attempted incarceration of political rivals, and attempted assassination of a popular leader.
Throw into the mixer the worst wealth divide, with half of the population owning just 2.5% of the total wealth in the US and the top 10% owning 66.9% of total wealth in the US in 2023.
Add the worst cost of living crisis in generations, with 40% of Americans unable to make a 1,000 USD emergency expense.
So it is a highly volatile, octane environment, one spark from major civil unrest leading to civil war.
Buying the CBOE Volatility Index could be one way of hedging against volatility, uncertainty and risks.
The intentional failures surrounding Trump security, along with the reported shorting by Austin Private Wealth of 15 million shares of Trump stock DJT via a put option on Friday, July 12. the last weekday before the assassination attempt, is concerning.
What next clandestine event lies ahead, investors should be asking.
Will Trumponomics see the light of day, bearing in mind four more months of electioneering is a long time?
In that context, let us define Trumponomics, the Trump administration’s economic policy characterized by economic liberalism and America First policies promoting protectionism to rebuild the Rustbelt and create manufacturing jobs.
Trumponomics would reduce the US balance of trade deficit
Trump protectionism would be a tailwind for strategic US industries, US semiconductors, US energy and mining, and manufacturing.
Tax cuts, low interest rates, low corporation taxes, quotes and tariffs on foreign goods are all a feature of Trumponomics.
Domestic small-medium size companies supplying to their home market would likely do well under the wings of Trumponomics, promoting a low interest rate and low energy cost environment where foreign rivals are either banned from entering or made prohibitively expensive.
But Europe could be left in economic isolation with a string of tariffs on many of its luxury goods under a Trump administration. A US and EU trade war could be a feature of Trump 2.0.
So, European corporations with large export markets to the US are likely to be adversely impacted by Trump’s protectionist policies.
Low interest rates are the Key pillar of Trumponomics
Fed chair Powell will likely serve his term as chair of the Federal Reserve, which will continue through May 2026.
But the likely deal is that Powell remains if he carries out loose monetary policy. Trumponomics could mean more rate cuts than the market anticipates.
Small-cap companies and the NASDAQ could outperform in a low-interest-rate environment.
The construction industry is likely to outperform. Home builders and sectors supporting home building, commodities, and building materials could all perform.
Trumponomics will crash ESG investing
Day one of the administration agenda will be “drill, baby drill” for oil and gas.
A policy fostering a plentiful supply of affordable oil and gas reconciles with supporting a productive economy, onshoring manufacturing and a boost to the Rustbelt auto industry.
ESG investing could be the worst place to invest in a Trump 2.0 administration.
Further deteriorating public deficit, Trumponomics?
Lower taxes and low interest rates could worsen the public deficit.
But the boom effect from Trumponomics could also trigger a windfall in tax receipts outweighing tax cuts. Moreover, the revenues from tariffs on imported goods could improve the public accounts.
The cutting of public sector jobs could also be a feature of a Trump 2.0 administration, which could also reduce the public deficit.
Jamie Dimon will be considered for secretary of the Department of the Treasury post.
Could Trumponomics tackle the twin deficits, the balance of trade and public deficit?
We will have to wait and find out.
USD will likely remain stable as it did in the Trump 1.0 administration.
Trumponomics and cryptos coexist
Trump’s reversal on cryptocurrency has been marked, with such comments as criticizing Bitcoin as a “scam” and a “disaster waiting to happen.” Now, Trump says it and other cryptocurrencies should be “made in the USA.” He frames this about-face as a practical necessity. “If we don’t do it, China is going to figure it out, and China’s going to have it—or somebody else,” he said.
In May, he made a speech saying he would “stop Joe Biden’s crusade to crush crypto.” The following month, he reaped the benefits, raising money from Bitcoin miners at a Mar-a-Lago fundraiser. Trump’s campaign, then announced it would “build a crypto army,” and it now accepts crypto contributions.
Trumponomics wealth effect
Here are the facts. US billionaires got one trillion dollars richer during Trump’s first tenure, with the economy losing 2.9 million jobs.
But enforced 2020 lockdowns contributed to those job losses, and unprecedented Fed easing benefited wealthy asset owners.
Trumponomics, if allowed to mature uninterruptedly, could benefit the US economy and its people, but it could be to the detriment of the global economy. America First policy means everyone else is in the lower order.
Trump surviving the assassination has made him even more of a demagogue.
A Trump 2.0 surrounded by loyalists with fewer checks and balances could lead to consolidation of power, in both the Senate and House of Representatives.
Would Trump abuse his consolidation of power, and how would the other side react to it?