The financial strategy commonly referred to as the “Trump trade” appears to be gaining momentum as recent polls suggest a potential shift toward Donald Trump in the upcoming election. The peculiarities of the Electoral College mean that even minor fluctuations in polling data in a few key states can significantly impact the outcome between Donald Trump and Kamala Harris.
As the 2024 election approaches its final stages, polls are becoming increasingly significant. With Election Day scheduled for November 5 and early voting already underway in several states, including highly contested Georgia and North Carolina, the polling data is being scrutinized closely. According to a recent analysis by FiveThirtyEight, Trump currently holds a slight edge with a 52-in-100 chance of winning, compared to Harris’s 58-in-100 chance just two weeks earlier. However, it should be noted that the race is still considered highly competitive.
While Kamala Harris continues to lead in national polls, her advantage has diminished throughout October. Her leads in crucial swing states such as Michigan, Pennsylvania, Wisconsin, and Nevada have narrowed or disappeared, while Trump has widened his leads in Georgia and North Carolina.
Past election cycles have shown that presidential polls can often fail to accurately predict outcomes, particularly in underestimating Trump’s support. Consequently, some analysts are turning to betting markets for more dependable insights, arguing that financial stakes incentivize accuracy. However, recent fluctuations on prominent prediction platforms like Polymarket have raised questions about their reliability, as a few wealthy bettors have appeared to influence the odds in Trump’s favor.
Economic markets are also actively trying to predict the election outcome, given the significant financial implications of the next presidency. Hedge fund manager Stanley Druckenmiller recently pointed to financial markets as indicators that many are convinced of Trump’s potential victory.
Current economic indicators reflecting the “Trump trade” include the U.S. Dollar Index, which has increased by 2% this month, and a 40 basis point rise in the 10-year Treasury yield. Trump’s tariffs and tax policies are expected to strengthen the dollar while increasing U.S. debt, thereby pushing bond yields higher. Additionally, Bitcoin has surged by 12% in October, reflecting Trump’s rebranding as a proponent of cryptocurrency, a stark contrast to his previous critical stance on Bitcoin.
Shares of Trump Media, the parent company of Truth Social, have soared by 83% this month. The stock, which acts as a barometer for Trump’s election prospects, experienced significant gains following Trump’s debate with Biden in June and after surviving an assassination attempt in July. However, after Biden withdrew from the race, Trump Media’s stock declined and further decreased last month as the stock’s lockup period ended, allowing insiders to sell their shares.
Other components of the Trump trade have shown mixed results, largely due to external factors beyond the election. Energy stocks, which could benefit from potential deregulation under a GOP administration, have remained relatively stable despite fluctuations in oil prices amid geopolitical tensions. The financial and healthcare sectors could also anticipate reduced regulation under Trump. However, insurance stocks dipped following weak guidance from UnitedHealth, while banking stocks increased on strong quarterly earnings reports.
