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 crammed with election predictions.
As with the previous election cycles, I count on some market volatility irrespective of who wins.
That’s as a result of large buyers 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 exhibits an extended 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 tendencies that may proceed irrespective of who wins:
The AI Growth: In fact, the market has been led this 12 months by the substitute intelligence growth which is able to proceed underneath both administration.
Mega-cap tech firms are spending tons 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 12 months, which quantities to over $300 billion!
The important thing right here is that after AI is totally developed within the middle, it would lead to an enormous improve cycle on the “edge”. I consider this may result in a renewed improve cycle in shopper expertise, as our gadgets have to be sooner 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 bought 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 probably keep underneath Trump as effectively.
Not solely are EVs persevering with to seize market share, however we’re rushing towards totally 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 stated 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 firms set to debut subsequent 12 months. Neither president goes to derail this expertise, 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 utterly mistaken. They assume it’s easy: Trump equals oil growth, Harris equals inexperienced power surge. However there’s a plot twist no person’s speaking about.
The numbers inform an surprising story. Underneath Trump, power shares plunged 40%. Underneath Biden? They rocketed up 105%. However don’t let these figures idiot you — they’d extra to do with world provide chains and pandemic restoration than political insurance policies.
You see, the clear power 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 sooner than a winter storm in Texas.
However I don’t see that occuring — Trump received’t minimize these manufacturing facility investments as a result of it means chopping 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 technology, batteries discharge electrical energy saved throughout the day.
That is going to proceed irrespective of who’s president!
The Crypto Revolution: Everybody is aware of the SEC has come down onerous on crypto operators underneath the Biden administration.
And the excellent news — underneath both administration this may change.
Trump, as soon as a bitcoin skeptic, is a self-proclaimed crypto candidate. He’s even bought a number of units of his personal NFTs and supported the launch of a brand new decentralized finance trade (which didn’t accomplish that effectively).
Furthermore, he promised to fireside crypto boogeyman and SEC Chairman Gary Gensler and shield bitcoin miners.
Whereas Trump is crypto’s favourite candidate, Harris guarantees a unique strategy 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 stated 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.
Although 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 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 onerous belongings — gold, commodities, actual property, and so on.
This time, it would result in a surge within the value of bitcoin as world residents can shield their fiat currencies with digital currencies that may’t be devalued resulting from extra printing.
Whereas a Trump win may result in a right away spike within the value of bitcoin, this long term pattern goes to occur irrespective of who wins the presidency.
The underside line? Cease watching the political theater and begin following the cash. The actual winners will probably be buyers who place themselves for enormous trade transformations, not marketing campaign guarantees.
Till subsequent time,
Ian King
Editor, Strategic Fortunes
