"Trump Trade" vs "Rate Cut Trade"! What are the investment targets that can aim for a double chance?
The recent volatility in the U.S. financial markets is due to"Rate Cut Trade" and "Trump Trade".It has emerged as the most popular trading theme at the moment.
The June consumer price index (CPI) in the United States fell more than expected, and with Chairman Powell's dovish comments, the Federal Reserve is expected to make its first interest rate cut of the year in September. Trump's favorability rating has expanded due to the first presidential debate and the shooting incidents, and in the United States,The beginning of the "Trump 2.0" era is expected.Being done.
The June consumer price index (CPI) in the United States fell more than expected, and with Chairman Powell's dovish comments, the Federal Reserve is expected to make its first interest rate cut of the year in September. Trump's favorability rating has expanded due to the first presidential debate and the shooting incidents, and in the United States,The beginning of the "Trump 2.0" era is expected.Being done.
Bitcoin.
On Monday, the Republican Party stated in its new platform that it will put an end to the Democratic Party's crackdown on cryptocurrencies and ensure the rights of Americans to safely store digital assets.
In other words,If Mr. Trump becomes president, there will be a significant change in the United States' stance on cryptocurrency.In addition, it has been recently revealed that Mr. Pence, Mr. Trump's vice presidential candidate, also has a large position in Bitcoin ETF (ETF), indicating the Republican stance on Bitcoin. $Fidelity Wise Origin Bitcoin Fund (FBTC.US)$The interest rate cut cycle itself is favorable for risk assets. In the recent interest rate cut cycle (August 2019 to March 2022), Bitcoin had the best performance, nearly tripling in value over the cycle.
On the other hand,Chairman Powell's "dovish" remarks! What are the assets to watch during the Fed's interest rate cut cycle?
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There are signs of a small-cap revival.
Rate cuts increase expectations for economic recovery, and Trump's tax cuts and "America First" policy stimulate the earnings expectations of US domestic companies, especially small and medium-sized enterprises.According to Mr. Kabura of Societe Generale, "Trump 2.0's potential policies will have a positive impact on a wide range of transactions, so the US elections are likely to induce frequent rotational trading."Said.
There are signs of a small-cap revival.
Rate cuts increase expectations for economic recovery, and Trump's tax cuts and "America First" policy stimulate the earnings expectations of US domestic companies, especially small and medium-sized enterprises.According to Mr. Kabura of Societe Generale, "Trump 2.0's potential policies will have a positive impact on a wide range of transactions, so the US elections are likely to induce frequent rotational trading."Said.
The shift from focusing on certainty to focusing on flexibility has made small-cap stocks, which previously faced challenges in business operations, more susceptible to economic fluctuations and market psychology.
Small-cap stocks are now showing higher resilience in both profitability and valuation, as a result of the shift from focusing on certainty to focusing on flexibility.In addition, small-cap stocks have long lagged behind large-cap stocks and are attractive in terms of valuation.
RBC Capital Markets strategist Lori Calvazina notes that $Russell 2000 Index (.RUT.US)$the growth forecast for performance and earnings $S&P 500 Index (.SPX.US)$is catching up.
On the other hand,The increasing speculation of interest rate cuts leads to increased pressure of short squeezes, increasing the risks of short selling and short covering by hedge funds and traders.The demand for call options related to the Russell 2000 has also been rapidly increasing in the options market, which is a positive signal.
Tom Lee of Fundstrat predicts that with the expansion of institutional investors' short positions due to this rate cut, the rise of small cap stocks could persist for about 10 weeks, with the strength of the rebound potentially reaching 40% or more, surpassing the 27% growth in the fourth quarter of last year.
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The US small caps have risen for 5 consecutive days, surpassing Nvidia and the S&P 500! Is it a good opportunity to buy?
The NY Dow Average is also performing well.
From a trading perspective, in historical terms, during an interest rate cut cycle, the Dow average has a high possibility of outperforming the Nasdaq, and the average performance is high. Out of the past 13 interest rate cut cycles, the Dow average has outperformed the Nasdaq 8 times, with an average return of 13.5% compared to the Nasdaq's 9.5%. $Dow Jones Industrial Average (.DJI.US)$is $Nasdaq Composite Index (.IXIC.US)$On the other hand, considering from the perspective of "Trump 2.0", there is a tendency for President Trump to support a return to traditional energy and manufacturing industries in the United States. His proposed expansionary policies are favorable for traditional industries such as oil, natural gas, infrastructure, manufacturing, and finance. This also logically supports the rise of the Dow average. In fact, looking back at the performance of the Dow average compared to other major indices after Trump's victory in 2016, it was quite impressive.
Under the perspective of "Trump 2.0",President Trump tends to support a return to traditional energy and manufacturing industries in the United States.This is favorable for traditional industries such as oil, natural gas, infrastructure, manufacturing, and finance. It also provides logical support for the rise of the Dow average. In fact, looking back at the performance of the Dow average compared to other major indices after Trump's victory in 2016, it was quite impressive.
Furthermore, the funds that have profited from high-tech stocks may be flowing into traditional value stocks and cyclical stocks in search of opportunities, which may be one of the reasons for the seesaw effect of the Dow and Nasdaq.
The attractiveness of gold as a safe-haven asset is increasing.
The price of gold futures (NY gold) temporarily exceeded the $2,480 mark this week.The expectation of interest rate cuts due to the weakening of the dollar has greatly increased the attractiveness of gold as a safe-haven asset.In addition, the shooting incident involving President Trump has increased political uncertainty and further boosted the demand for precious metals as safe-haven assets.
As uncertainty surrounding the US election increases, demand for gold is expected to continue growing in the second half of this year. According to a recent survey by the World Gold Council (WGC), approximately 30% of central banks intend to increase their gold reserves over the next 12 months. Bank of America boldly predicts that the price of gold will reach $2,750 by 2025 and could rise to $3,000 within 12-18 months.
Real estate, industrial, and other sectors also showed significant performance.
In terms of sector performance, among the S&P 500 constituents, only information and communication services experienced a decline last week, while other sectors showed an upward trend. Real estate, capital goods, financials, materials, energy, and healthcare all saw increases of more than 3% last week.
Notable is that regional banks, biotechnology, and real estate sectors that are sensitive to interest rate changes are benefiting greatly from expectations of rate cuts. These sectors have recently shown remarkable upward trends.
Related Article
Is Trump's advance taking over the stock market? Who will be the winners in the Trump market?
The 'Trump Trade' ETF version! Here are 5 selected ETFs that are experiencing accelerated inflows of funds.
A 'Biden vs Trump' reenactment in the U.S. presidential election! What stocks should we be watching?
Source: Bloomberg, moomoo, CNBC
- Moomoo News Evelyn
This article utilizes automatic translation in certain parts.
RBC Capital Markets strategist Lori Calvazina notes that $Russell 2000 Index (.RUT.US)$the growth forecast for performance and earnings $S&P 500 Index (.SPX.US)$is catching up.
On the other hand,The increasing speculation of interest rate cuts leads to increased pressure of short squeezes, increasing the risks of short selling and short covering by hedge funds and traders.The demand for call options related to the Russell 2000 has also been rapidly increasing in the options market, which is a positive signal.
Tom Lee of Fundstrat predicts that with the expansion of institutional investors' short positions due to this rate cut, the rise of small cap stocks could persist for about 10 weeks, with the strength of the rebound potentially reaching 40% or more, surpassing the 27% growth in the fourth quarter of last year.
Related Article
The US small caps have risen for 5 consecutive days, surpassing Nvidia and the S&P 500! Is it a good opportunity to buy?
The NY Dow Average is also performing well.
From a trading perspective, in historical terms, during an interest rate cut cycle, the Dow average has a high possibility of outperforming the Nasdaq, and the average performance is high. Out of the past 13 interest rate cut cycles, the Dow average has outperformed the Nasdaq 8 times, with an average return of 13.5% compared to the Nasdaq's 9.5%. $Dow Jones Industrial Average (.DJI.US)$is $Nasdaq Composite Index (.IXIC.US)$On the other hand, considering from the perspective of "Trump 2.0", there is a tendency for President Trump to support a return to traditional energy and manufacturing industries in the United States. His proposed expansionary policies are favorable for traditional industries such as oil, natural gas, infrastructure, manufacturing, and finance. This also logically supports the rise of the Dow average. In fact, looking back at the performance of the Dow average compared to other major indices after Trump's victory in 2016, it was quite impressive.
Under the perspective of "Trump 2.0",President Trump tends to support a return to traditional energy and manufacturing industries in the United States.This is favorable for traditional industries such as oil, natural gas, infrastructure, manufacturing, and finance. It also provides logical support for the rise of the Dow average. In fact, looking back at the performance of the Dow average compared to other major indices after Trump's victory in 2016, it was quite impressive.
Furthermore, the funds that have profited from high-tech stocks may be flowing into traditional value stocks and cyclical stocks in search of opportunities, which may be one of the reasons for the seesaw effect of the Dow and Nasdaq.
The attractiveness of gold as a safe-haven asset is increasing.
The price of gold futures (NY gold) temporarily exceeded the $2,480 mark this week.The expectation of interest rate cuts due to the weakening of the dollar has greatly increased the attractiveness of gold as a safe-haven asset.In addition, the shooting incident involving President Trump has increased political uncertainty and further boosted the demand for precious metals as safe-haven assets.
As uncertainty surrounding the US election increases, demand for gold is expected to continue growing in the second half of this year. According to a recent survey by the World Gold Council (WGC), approximately 30% of central banks intend to increase their gold reserves over the next 12 months. Bank of America boldly predicts that the price of gold will reach $2,750 by 2025 and could rise to $3,000 within 12-18 months.
Real estate, industrial, and other sectors also showed significant performance.
In terms of sector performance, among the S&P 500 constituents, only information and communication services experienced a decline last week, while other sectors showed an upward trend. Real estate, capital goods, financials, materials, energy, and healthcare all saw increases of more than 3% last week.
Notable is that regional banks, biotechnology, and real estate sectors that are sensitive to interest rate changes are benefiting greatly from expectations of rate cuts. These sectors have recently shown remarkable upward trends.
Related Article
Is Trump's advance taking over the stock market? Who will be the winners in the Trump market?
The 'Trump Trade' ETF version! Here are 5 selected ETFs that are experiencing accelerated inflows of funds.
A 'Biden vs Trump' reenactment in the U.S. presidential election! What stocks should we be watching?
Source: Bloomberg, moomoo, CNBC
- Moomoo News Evelyn
This article utilizes automatic translation in certain parts.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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超長期投資家 : bitcoin?
I won't buy