Investors have found peace in another Trump presidency

As thoughts of a second Donald Trump presidency begin to circulate amid President Joe Biden’s prime-time debate debacle, investors remain calm and active.

“One takeaway from last week’s debate is that the market is comforted by Donald Trump becoming the next president,” Bradesco’s head of equity strategy Ben Laidler said on my ‘Opening Bit’ podcast (video above or listen Here) “We’ve seen the markets come up a little bit, and we haven’t seen that volatility.”

Trump and Biden stunned debate viewers, with the former spewing lies and the latter appearing weak and out of touch.

Since the debate aired on the evening of June 27, the S&P 500, the Nasdaq Composite and the Dow Jones Industrial Average were only marginally lower.

Shares of market leader Apple ( AAPL ) rose about 1.6%, while Amazon ( AMZN ) saw its stock trade sideways.

Morgan Stanley strategist Mike Wilson says the morning after the debate saw client interest swirling for 2016 “Trump trades” in the cyclical and small-cap space.

“Market expectations for fiscal expansion, inflation and less regulation under the Trump presidency drove these initial moves in our view,” Wilson said in a client note.

One area to see if Lightler’s thesis is entirely correct: sizzling AI trading.

Shares of AI bellwether Nvidia ( NVDA ) fell 3% following the debate.

Laidler says, “I think investors are looking back at the first Trump presidency and, you know, it was a very positive business, I made a lot of money — maybe we’re going to get that again.”

Despite various surprising events, such as the COVID-19 pandemic and the storming of the Capitol, investors have generally enjoyed solid returns during the Trump presidency. Not to mention new tariffs on China, a key trading partner.

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According to data crunched by LPL Financial, the Dow Jones Industrial Average has returned 56% during Trump’s presidency. The Dow hit new highs of 126.

The S&P 500 rose more than 50%.

Apple shares soared more than 350% during Trump’s presidency, part of a broader rally in tech stocks.

Proponents say the gains were driven primarily by the Trump tax cuts boosting corporate profits and the effect of the stock’s wealth boost on consumer spending.

But those expecting sunshine and rainbows from a potential Trump presidency may want to dial back expectations, at least initially.

Wilson points out that the stock’s background is very different than it was in 2016.

“We would argue that the cycle is more mature today than it was in 2016, as evidenced by (among other variables) the two-and-a-half-year decline in the Conference Board’s leading economic indicator series,” Wilson said.

“The market welcomed the reflationary playbook in 2016. Inflation wasn’t head-butting consumers the way it is now, and the U.S. economy is recovering from a manufacturing/commodities recession, whose recovery has been aided by biased prospects. Today, inflation is a significant intervention for consumers and financial stability dynamics for the bond market. First.”

Ford ( F ) CEO Jim Farley said consumers may get a little nervous around the presidential election, but he doesn’t believe it will significantly reduce demand for autos. See Farley’s insights below in a ‘Opening the auction‘ Chapter.

Opening the auction Episode list

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