Hedge fund managers are preparing for a possible Trump victory in November by stocking their portfolios with stocks that would benefit from a Trump victory, the Wall Street Journal reported on Wednesday.
outlet identified He cited sectors such as the private prison industry and cryptocurrencies as sectors that could benefit from a Trump victory, highlighting the significant rise in stock prices of companies within these sectors as evidence.
Investors like Third Point’s Dan Loeb cited President Trump’s tariff proposals as a reason to be optimistic about his impact on the stock market.
The tariffs would “increase domestic manufacturing, infrastructure spending, and the price of certain materials and goods,” Loeb said in a letter to investors, as reported by the Journal. “We also believe that reductions in regulation in general and the Biden-Harris Administration’s aggressive antitrust policies in particular will unleash a wave of productivity and business activity.”
Since the beginning of October, Mr. Trump’s odds in the betting market have steadily increased. At the beginning of the month, election forecaster and betting hub Polymarket Trump had a 49% chance of winning, while Kamala Harris had a 50% chance of winning. By Wednesday, Trump’s odds had jumped to 62% and Harris’ 38%.
This shift in odds has made the election more of a priority for investors, the Journal reported. (Related: Two weeks before Election Day, Trump leads Harris in key battleground states, poll results)
Themos Fiotakis, global head of foreign exchange and emerging markets macro strategy at Barclays, told the Journal that Trump’s line may have contributed to the recent depreciation of the Chinese yuan and Mexican peso.
Meanwhile, the U.S. dollar rose sharply in line with President Trump’s betting odds. According to Journal Dollar Index.
#recession … global $USD #Liquidity Squeeze version
us #Dollar index $DXY 📈 😬 pic.twitter.com/QOL9mgDFRv
— Invariant Persp1 (@InvariantPersp1) October 23, 2024
Fiotakis told the newspaper that bets on the yuan, peso and US dollar “are no longer as easy to get cheap as they were a few weeks ago.”
Most of the inventors cited by the magazine seemed enthusiastic about Trump’s victory, but not all were betting that his victory would benefit the economy. Some, like RBC BlueBay’s Mark Dowding, are betting that President Trump’s tariffs will increase inflation, the WSJ reports.
