Trump’s Show‑Business Gearing Up for the RNC
With the Republican National Convention just around the corner, all eyes are glued to Donald Trump. Think of him as the headliner at a sold‑out arena: applause, lights, the works.
Joe Biden’s “Magic Trick” Challenge
Biden made a strong speech to the nation, but the clock’s ticking on his campaign. He needs to pull a convincing “rabbit out of a hat” this week—something that will ignite Democratic enthusiasm and give his team a positive narrative. Meanwhile, it’s looking like a classic Trump vs. Biden showdown, with the RNC only amplifying the Yankees‑style unity of the GOP.
What the Market Is Saying
- New polls after the assassination attempt are on the way, but from the betting sidelines, Trump’s odds to reclaim the White House hover near 66%.
- Biden’s firm grip as the Democratic nominee reassures investors that a 2024 clash is inevitable.
- The odds now skew heavily toward Republicans not only taking the White House and Senate but also carrying a realistic shot at the House—a gamble that was once deemed unlikely.
How a Trump Presidency Impacts the Economy
Clients have asked: “What happens to the markets if Trump wins?” It all boils down to whether the GOP can crack the House. A full‑blown “Red Wave” would let them pass sweeping fiscal initiatives without much resistance.
The Market’s Trump‑Forward Forecast
After the first debate and today’s market action, traders are already leaning toward a Trump‑rule narrative. If he gets on the throne, US equities might see a boost—especially with promises of deregulation that would serve as a clean topping on the cocktail of optimism.
- Tariffs against China could keep the USD strong while pulling harder on the MXN and CNY.
- China/HK stocks might take a hit, hinting at the possibility of a 60% tariff on Chinese exports.
- “Long NASDAQ‑100, short HK50” is shaping up to be a key play in the Trump betting book.
US Treasury futures are up by 4 bps, signaling a belief that the 2017 Tax Cuts and Jobs Act could roll out fully by 2025. A clean Red Wave would cement this, potentially ballooning the deficit by more than $1.5 trillion—while defense spending and tax cuts stay on the agenda. Medicare and Medicaid stay off the table, so we’re left wondering where the offsets will come from.
All in all, higher long‑term US yields and steeper curves loom. Under a Trump administration, the Fed might adopt a third mandate: keep interest rates low to help the Treasury shoulder its cost.
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