Recently, with a “God’s bullet” passing through Trump’s ear and Biden being exposed to have contracted COVID-19, the election dynamics are increasingly one-sided. It seems only a matter of time before Trump is elected as the 47th President of the United States.

This has triggered the so-called “Trump Trade” in the capital markets, where investors adjust their strategies based on the policies Trump might implement.

Let’s break down the consensus in the market regarding the “Trump Trade,” which reflects what people generally believe Trump will do if he returns to power. Additionally, we’ll look at the “anti-consensus,” which encompasses Trump’s statements or actions that deviate from market expectations.

Trump’s Policies Could Push Inflation Higher

• Consensus: Trump’s policies of tax cuts, increased tariffs, and immigration restrictions might lead to higher prices. These measures could increase demand for goods and services while raising production costs.
• Trump’s Stance: He has stated that he cannot accept inflation and has even mentioned in the Republican platform the need to “end inflation.”

Long-term U.S. Treasury Yields to Remain High

• Consensus: If inflation rises, the long-term interest rates on U.S. Treasury bonds (such as the 10-year Treasury) might stay high.
• Trump’s Stance: He prefers lower interest rates. “Low interest rates” is a key phrase in “Trump Economics.”

The Dollar Might Strengthen

• Consensus: Trump’s trade protectionism and fiscal easing policies could strengthen the dollar. Trade protectionism might reduce imports and increase exports, thus reducing the trade deficit. Additionally, increased risk aversion could boost demand for the dollar.
• Trump’s Stance: He wishes for a weaker dollar to benefit exports and reduce the trade deficit.
  
  (This appears contradictory to his other policies. For instance, trade protectionism might actually push the dollar higher, but exchange rate trends are influenced by multiple factors, with monetary policy and economic performance playing decisive roles.)

Stock Market Could See New Growth

• Consensus: Trump’s large-scale tax cuts and deregulation policies are beneficial for the stock market, as these measures could stimulate economic growth and boost corporate profits.
• Actual Situation: In the three trading days when Trump’s election odds surged, the S&P 500 fell by 0.48%, and the Nasdaq dropped by 2.19%.
  
  (Possible reasons include the early realization of rate cut expectations, shifts in market risk preferences, adjustments in the semiconductor supply chain, and risk releases from tech giants.)

Trump’s Election Prospects

• General Belief: Trump is expected to be elected as the 47th President of the United States, which might further fuel the “Trump Trade.”
• Actual Situation: Despite Trump’s high chances of winning, there is still a considerable amount of time before the final election. Various uncertainties might arise during this period, and the Democratic Party will not give up easily. The ultimate outcome is still uncertain.

In future observations, it’s crucial to distinguish between Trump’s policies and slogans and to pay attention to the implementation strength and pace of specific policies. Investors should also be mindful of risks such as inflation and geopolitical factors. In simple terms, don’t just listen to what Trump says; watch what he does and how these actions impact the economy and markets.