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 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 below the brand new administration.
And this might come earlier than later.
Right here’s a chart from The Economist that reveals 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 larger 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 can proceed irrespective of who wins:
The AI Growth: After all, the market has been led this 12 months by the synthetic intelligence increase which is able to proceed below both administration.
Mega-cap tech firms are spending lots 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 when AI is absolutely developed within the middle, it’ll lead to an enormous improve cycle on the “edge”. I imagine this can result in a renewed improve cycle in client know-how, as our units should be quicker to run superior AI computation.
The Transportation Revolution: The way in which we get across the earth will undergo a dramatic change within the subsequent few years.
Globally, electrical automobiles accounted for round 18% of all automobiles bought in 2023, up from 14% in 2022 and solely 2% 5 years earlier, in 2018. Beneath Harris, present EV incentives will keep. And I feel the Trump / Elon Musk alignment means they’ll possible keep below Trump as effectively.
Not solely are EVs persevering with to seize market share, however we’re dashing towards absolutely autonomous autos. 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 “most likely” have his robotaxi on the roads in 2026.
Additionally, we’re on the verge of eVTOL (electrical vertical take-off and touchdown) journey with quite a few firms set to debut subsequent 12 months. Neither president goes to derail this know-how, and I feel 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 improper. They assume it’s easy: Trump equals oil increase, Harris equals inexperienced vitality surge. However there’s a plot twist no one’s speaking about.
The numbers inform an sudden story. Beneath Trump, vitality shares plunged 40%. Beneath Biden? They rocketed up 105%. However don’t let these figures idiot you — that they had extra to do with international provide chains and pandemic restoration than political insurance policies.
You see, the clear vitality sector has $200 billion in new manufacturing unit investments on the road. A Harris win retains that momentum going. A Trump win? These investments might freeze quicker than a winter storm in Texas.
However I don’t see that taking place — Trump gained’t reduce these manufacturing unit investments as a result of it means slicing American jobs.
The renewable revolution is right here. Check out this graph of gasoline combine from California.
Many 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 an alternative of fossil gasoline 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 laborious on crypto operators below the Biden administration.
And the excellent news — below both administration this can 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 alternate (which didn’t achieve this 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 distinct strategy than Biden — though we haven’t heard a lot general.
Harris informed donors at a fundraising occasion that she would encourage development within the digital property area.
The marketing campaign additionally tapped billionaire and crypto fanatic Mark Cuban, who stated that Harris was “much 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 Conflict V (Virus) world is awash in debt. Right here’s a chart that illustrates how that debt skyrocketed beginning in 2020.
Despite the fact that Debt to GDP has come down from the anomalous studying in 2020 (GDP was zero or detrimental), it’s nonetheless working at an all-time excessive.
To eliminate the debt overhang, governments both must develop their economies or inflate them by printing more cash. The latter is often what occurs.
When more cash is printed to pay down debt, it results in an increase in laborious property — gold, commodities, actual property, and so on.
This time, it’ll result in a surge within the value of bitcoin as international residents can shield their fiat currencies with digital currencies that may’t be devalued as a result of extra printing.
Whereas a Trump win would possibly result in a right away spike within the value of bitcoin, this long term development goes to occur irrespective of who wins the presidency.
The underside line? Cease watching the political theater and begin following the cash. The true winners will probably be buyers who place themselves for large trade transformations, not marketing campaign guarantees.
Till subsequent time,
Ian KingEditor, Strategic Fortunes
