Focus: Activating the “Trump Trade” and incorporating tax cuts, deregulation, and high prices

July 18, 2024 at 10:56 AM GMT+9 (some excerpts)

“Trump trade,” which bets on a scenario where former President Trump will be re-elected in the US presidential election in November, is becoming active. In recent weeks, there has been a movement that incorporates both the view that Mr. Trump's policy for a second term will boost corporate performance and concerns that it will lead to long-term financial deterioration.
Stock market investors are concentrating their funds on small-cap stocks and energy stocks that have the potential to benefit from Mr. Trump's policies, such as tax cuts and deregulation. These preferences are combined with the expectation that the US Federal Reserve (FRB) will cut interest rates within a few months, and cyclical shopping to shift from large technology stocks to overdue stocks is becoming active.