It’s election day!
Outdoors 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 anticipate 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 beneath the brand new administration.
And this might come earlier than later.
Right here’s a chart from The Economist that exhibits 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 developments that can proceed irrespective of who wins:
The AI Growth: In fact, the market has been led this 12 months by the synthetic intelligence increase which is able to proceed beneath both administration.
Mega-cap tech corporations are spending a whole lot of billions in an AI arms race. There are not 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 after AI is absolutely developed within the middle, it’s going to lead to an enormous improve cycle on the “edge”. I consider it will result in a renewed improve cycle in shopper expertise, as our units must be sooner to run superior AI computation.
The Transportation Revolution: The best way 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 offered in 2023, up from 14% in 2022 and solely 2% 5 years earlier, in 2018. Below Harris, present EV incentives will keep. And I feel the Trump / Elon Musk alignment means they’ll probably keep beneath Trump as properly.
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 Could! Furthermore, Musk mentioned 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 a variety of corporations set to debut subsequent 12 months. Neither president goes to derail this expertise, and I feel they are going to be a giant a part of the 2028 video games as athletes soar throughout Los Angeles over the dreaded rush hour visitors.
The Renewable Revolution: Most analysts are getting this fully improper. They suppose it’s easy: Trump equals oil increase, Harris equals inexperienced power surge. However there’s a plot twist no person’s speaking about.
The numbers inform an sudden story. Below Trump, power shares plunged 40%. Below Biden? They rocketed up 105%. However don’t let these figures idiot you — they’d extra to do with world provide chains and pandemic restoration than political insurance policies.
You see, the clear power sector has $200 billion in new manufacturing facility investments on the road. A Harris win retains that momentum going. A Trump win? These investments may freeze sooner than a winter storm in Texas.
However I don’t see that taking place — Trump gained’t minimize these manufacturing facility 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 in the course of the day.
That is going to proceed irrespective of who’s president!
The Crypto Revolution: Everybody is aware of the SEC has come down onerous on crypto operators beneath the Biden administration.
And the excellent news — beneath both administration it will change.
Trump, as soon as a bitcoin skeptic, is a self-proclaimed crypto candidate. He’s even offered a number of units of his personal NFTs and supported the launch of a brand new decentralized finance trade (which didn’t achieve this properly).
Furthermore, he promised to fireside crypto boogeyman and SEC Chairman Gary Gensler and defend bitcoin miners.
Whereas Trump is crypto’s favourite candidate, Harris guarantees a special strategy than Biden — though we haven’t heard a lot total.
Harris advised 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 mentioned that Harris was “way 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 Warfare 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 destructive), it’s nonetheless working at an all-time excessive.
To eliminate the debt overhang, governments both should develop their economies or inflate them by printing more cash. The latter is normally what occurs.
When more cash is printed to pay down debt, it results in an increase in onerous property — gold, commodities, actual property, and many others.
This time, it’s going to result in a surge within the value of bitcoin as world residents can defend their fiat currencies with digital currencies that may’t be devalued attributable to extra printing.
Whereas a Trump win may 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 actual winners will probably be buyers who place themselves for enormous trade transformations, not marketing campaign guarantees.
Till subsequent time,
Ian King
Editor, Strategic Fortunes
