Hedge fund managers are preparing for a potential Trump win in November, loading up their portfolios with stocks that would benefit from a Trump victory, The Wall Street Journal (WSJ) reported Wednesday.
The outlet identified sectors like the private prison industry and cryptocurrency as ones that would stand to benefit from a Trump win, and highlighted large rises in the stock prices for corporations within those industries as proof.
Investors like Third Point’s Dan Loeb cited Trump’s proposed tariffs as reasons to be optimistic about a Trump presidency’s impact on the stock market.
The tariffs “will increase domestic manufacturing, infrastructure spending, and prices of certain materials and commodities,” Loeb wrote in a letter to investors, the WSJ reported. “We also believe that a reduction in regulation generally and especially in the activist antitrust stance of the Biden-Harris administration will unleash productivity and a wave of corporate activity.”
Trump’s odds on betting markets have been steadily growing since the start of October. At the month’s start, election forecaster and betting hub Polymarket had Trump at a 49 percent likelihood of winning with Kamala Harris at 50 percent. By Wednesday Trump had surged to a 62 percent likelihood versus Harris’ 38 percent.
That shift in odds, WSJ reports, has made the election more of a priority for investors. (RELATED: Trump Leading Harris in Key Swing State Two Weeks Before Election Day, Poll Finds)
The Trump trajectory may have led to recent declines in the Chinese yuan and Mexican peso, Barclays’ global head of foreign-exchange and emerging-markets macro strategy Themos Fiotakis told the WSJ.
The U.S. Dollar, meanwhile, has risen sharply in concurrence with Trump’s betting odds, according to the Journal’s Dollar Index.
#recession … Global $USD #Liquidity Squeeze edition
US #Dollar Index $DXY 📈 😬 pic.twitter.com/QOL9mgDFRv
— Invariant Perspective (@InvariantPersp1) October 23, 2024
Betting against the yuan and the peso and on the U.S. dollar “is no longer a cheap no-brainer like it was two or three weeks ago,” Fiotakis told the Journal.
While most of the inventors the Journal cited seemed to be keen on a Trump win, not all of them were betting his victory would benefit the economy. Some, like RBC BlueBay’s Mark Dowding, appear to be making bets banking on the Trump tariffs increasing inflation, WSJ reported.
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