Latest / The SME Stream / All the Trump trades: Bitcoin, big tech, banks & bets

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All the Trump trades: Bitcoin, big tech, banks & bets · The SME Stream

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  Speaker 1: The information provided in this program is of a general
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  Speaker 1: nature and is not intended to be personalized financial advice.
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  Speaker 1: We encourage you to seek appropriate advice from a qualified
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  Speaker 1: professional to suit your individual circumstances. The Trump trades have
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  Speaker 1: all played out, Bitcoin, big tech, and bond yields are
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  Speaker 1: all surging. As has come back became a reality what
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  Speaker 1: assets money may flow to next?
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  Speaker 2: So you know, if we have an equity market that
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  Speaker 2: could rise by twenty percent within the year, that's pretty significant.
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  Speaker 1: What do you think, Greg, the lesson should be for
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  Speaker 1: investors on the prediction market versus the polls? Is the
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  Speaker 1: lesson always follow the money? Oh?
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  Speaker 2: It seems to be, doesn't it.
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  Speaker 1: Major US stock markets, the S and P five hundred
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  Speaker 1: and Nasdaq have hit new records, marking the best post
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  Speaker 1: election day in their history. That's on top of the
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  Speaker 1: lead up to the US election, where the same markets
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  Speaker 1: had their best pre election performance since nineteen thirty six.
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  Speaker 1: According to investor Pedia, investors were favoring bank stocks as
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  Speaker 1: well as the US dollar and gold. As the result
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  Speaker 1: rolled in, Bitcoin had its biggest moment here we go,
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  Speaker 1: heading an all time hive seventy five thousand US dollars
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  Speaker 1: on America's election night, so.
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  Speaker 3: She couldn't have written a better script. Having it hit
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  Speaker 3: a new all time high on the night of the election.
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  Speaker 3: I think one of the most important things is we
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  Speaker 3: have the first bitcoin president.
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  Speaker 2: Hello, bitcoiners, thank you very much. Hello, it's good to
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  Speaker 2: be with you.
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  Speaker 1: The frenzy flowed into Black Rocks Bitcoin exchange traded fund,
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  Speaker 1: taking in one billion US dollars of inflows in the
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  Speaker 1: first twenty minutes of the market opening post election result.
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  Speaker 1: On the night, the prediction markets bet the polls with
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  Speaker 1: billions of dollars in punts price singing a Trump victory
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  Speaker 1: before it was actually officially announced. Traders executed that accordingly.
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  Speaker 1: On the bond market, This is how the short term
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  Speaker 1: two year and long term ten year bond yields responded
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  Speaker 1: on election night, going vertical, according to JB. Drax on Or.
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  Speaker 1: That was on top of increases in the weeks leading
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  Speaker 1: up as trade is priced in risks to inflation from
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  Speaker 1: Trump's proposed plan, including higher tariffs on imports. Analysis of
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  Speaker 1: candidate campaign promises suggested Trump would trigger a deepening in
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  Speaker 1: the US fiscal deficit of around seven point seven trillion
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  Speaker 1: US dollars.
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  Speaker 3: Just because the promises has given of significant tax cuts
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  Speaker 3: are generally estimated to be far larger than the ones
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  Speaker 3: that Democrats have, and I think we would end up
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  Speaker 3: in a deficit situation.
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  Speaker 1: Whether that occurs or is allowed by Congress is yet
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  Speaker 1: to be seen, but US based economists have their concerns.
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  Speaker 3: The United States all deficits a little bit like those
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  Speaker 3: fancy credit cards that'll tell you what the credit limit is.
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  Speaker 3: There is a credit limit, but the only way to
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  Speaker 3: find out is by hitting it, and I think that's
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  Speaker 3: what has economists concerned.
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  Speaker 1: Tiger Brokers Chief strategy Officer Greg Bolland has been watching
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  Speaker 1: all as it's closely before, during, and after the US election.
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  Speaker 1: Look at Tesla, I mean that was not as high
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  Speaker 1: as fifteen percent on stage the Sun.
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  Speaker 2: Yeah, well so it's nearly there again.
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  Speaker 1: So never met against Elona, Now.
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  Speaker 2: I've never been against Elon is obviously back the winning
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  Speaker 2: horse here.
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  Speaker 1: He says, if it's anything like the last Trump presidency,
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  Speaker 1: stocks will be in for a boost. Great, good to
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  Speaker 1: see you, Thank you so much for doing this big week.
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  Speaker 2: Yes, thank you, medicine. Lovely to see you again. And
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  Speaker 2: he's a huge week this week and a huge weeks
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  Speaker 2: last week. So last week we had two hundred and
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  Speaker 2: fifty six of the S and P five hundred stocks report,
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  Speaker 2: and then this week obviously we've got the election and
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  Speaker 2: tomorrow morning news on in time the Federal Reserve, it
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  Speaker 2: probably will well ninety chance of also reducing rates by
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  Speaker 2: another twenty five basis points.
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  Speaker 1: Great, mostly between us until the weekend. Then that's when
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  Speaker 1: we can restore it.
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  Speaker 2: Yeah, and around them. Walking on to Halp Medison last Saturday,
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  Speaker 2: just to keep myself in tune.
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  Speaker 1: Oh that's great. Like, I want to ask you about
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  Speaker 1: your Trump trades, if you don't mind sharing, how were
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  Speaker 1: you prepositioned going into this and if you don't mind
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  Speaker 1: telling us, how have they played out for you?
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  Speaker 2: My own personal trades mostly been selling puts against stocks
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  Speaker 2: that I think are going to rise. So with stocks
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  Speaker 2: like quoll Con they're reporting is tomorrow, the stock prices
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  Speaker 2: around one sixty yesterday, it's around one seventy today, and
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  Speaker 2: so I'm happy to buy it at one fifty. So
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  Speaker 2: if I sell a put, I make some money out
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  Speaker 2: of that put premium that someone's prepared to pay me.
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  Speaker 2: That's how I've done it, just by selling productions on
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  Speaker 2: markets that on stocks that I think are going to
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  Speaker 2: go higher.
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  Speaker 1: You're always the derivatives guy, I love it. Let's talk
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  Speaker 1: about all those broad Trump trades that we're seeing across
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  Speaker 1: markets right now. Equities are certainly up in the US
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  Speaker 1: across the board significantly, big tech, real winner, banks, a
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  Speaker 1: big winner Bitcoin, USD. I mean, give me the color
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  Speaker 1: on how this has played out and how strong it is.
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  Speaker 2: Okay, So the main thing is is what the markets
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  Speaker 2: want is certainty, and this has been a very decisive
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  Speaker 2: win for Trump and also the Republicans in terms of
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  Speaker 2: the Senate and also Congress. So it is definitely a
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  Speaker 2: move in their case the red or to the right
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  Speaker 2: towards it Republican government. In terms of the Trump trades,
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  Speaker 2: as you said, there's certain stocks that are done particularly well.
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  Speaker 2: And if we look at at the markets today, the
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  Speaker 2: Trump related stocks themselves, like Trump Media, is actually more
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  Speaker 2: or less flat, although yesterday it was up around fifty
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  Speaker 2: or sixty percent in the after ours market last night. Today,
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  Speaker 2: the financials have been the big winner and definitely the
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  Speaker 2: top two out of the stocks that have gone higher
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  Speaker 2: is Goldman Sachs and JP Morgan both up. JP Morgan
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  Speaker 2: up ten and a half percent. And Godman Sacks up
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  Speaker 2: about up a little bit more than that, but also
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  Speaker 2: the likes of Morgan, Stanley and City and Wells Fargo
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  Speaker 2: all up between sort of eight and a half and
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  Speaker 2: twelve and a half percent, so they'll been the biggest
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  Speaker 2: winner in terms of stocks. And if you look at
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  Speaker 2: the S and P five hundred out of the top
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  Speaker 2: twenty gainers, eleven are financials.
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  Speaker 1: While financial is up so strongly, I'm assuming that that's
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  Speaker 1: because investors are now taking out the risk of extra regulation.
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  Speaker 2: Right, yes, extra regulation, tax perhaps and benefiting smaller companies.
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  Speaker 2: Companies grow, they need to then list or or get
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  Speaker 2: more capital, so they go to the big banks for
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  Speaker 2: that capital. And also more certainty abound interest rate it's
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  Speaker 2: going forward and inflation coming down definitely. The job numbers
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  Speaker 2: last week were pretty weak. The ICM numbers this week
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  Speaker 2: were reasonable, So the chances of probability of a rate
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  Speaker 2: cut on Friday is very high.
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  Speaker 1: Where do you think equities could go from here? If
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  Speaker 1: you look at history, how have US equity markets performed
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  Speaker 1: when there has been such a decisive like this election
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  Speaker 1: result and also a Republican result.
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  Speaker 2: Yeah, okay, so in terms of in terms of the results,
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  Speaker 2: so we can we can look at charts in terms
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  Speaker 2: of returns the day after, the week after, the months after,
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  Speaker 2: and the year after, if you like. And if you
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  Speaker 2: look at the last two elections, so that Biden election,
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  Speaker 2: the day of the election was certain that he was
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  Speaker 2: the president, the market went up two point two percent
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  Speaker 2: and the SMP five hundred wreas previously under trumpet went
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  Speaker 2: up one point one per And the average between nineteen
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  Speaker 2: eighty four and now is actually a decrease of about
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  Speaker 2: zero point five of a percent. So the SMP rallying
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  Speaker 2: today around two point six percent is higher than it's
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  Speaker 2: ever done in the last perod from nineteen eighty.
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  Speaker 1: Well, so this is actually rare, and that's considering that
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  Speaker 1: it was already the best pre election performance since like
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  Speaker 1: nineteen thirty six heading into this. So this all net
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  Speaker 1: is pretty incredible for equity.
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  Speaker 2: Market three and the equity markets will continue to go
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  Speaker 2: higher in my opinion. And if you look at the
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  Speaker 2: returns on the SMP five hundred in the year after
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  Speaker 2: an election, it's around sixteen and a half percent. Under Biden,
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  Speaker 2: it was around twenty four percent. Trump around twenty four
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  Speaker 2: percent also, and also Obaman in his last term it
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  Speaker 2: was up around twenty six percent. So you know, if
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  Speaker 2: we have an equity market that could rise by twenty
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  Speaker 2: to twenty five percent within the year, that's pretty significant
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  Speaker 2: for people who wish to invest inequities and significant for
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  Speaker 2: New Zealanders who have qvserver funds, and a lot of
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  Speaker 2: these server funds invest in these top tier companies in
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  Speaker 2: the US.
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  Speaker 1: No such thing as an absolute short thing, though, Greg No,
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  Speaker 1: if we consider the risks. It is proposed that Trump
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  Speaker 1: would be more inflationary to the US economy through things
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  Speaker 1: like direct tariffs on imported goods into the US. How
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  Speaker 1: could slightly higher inflation if that occurs, if we get
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  Speaker 1: more borrowing and a larger fiscal deficit in the US,
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  Speaker 1: how could that impact US company earnings?
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  Speaker 2: Yeah, certainly so in terms of in terms of the
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  Speaker 2: tariffs and the like. It's definitely something that the market
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  Speaker 2: may may increase in. Moody's put out a report saying
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  Speaker 2: that under a Trump government, inflation could go from the
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  Speaker 2: two and a half percent to three and a half
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  Speaker 2: percent by the end of twenty twenty five. Under House
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  Speaker 2: would have maybe stayed the same or even belower. So
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  Speaker 2: it definitely is cause for worry. In terms of inflation,
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  Speaker 2: prices may go up, but one percent there is not
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  Speaker 2: too high in terms of you know, under the Biden
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  Speaker 2: administration it was the third worst term in terms of
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  Speaker 2: inflation and an average inflation rate for that whole term.
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  Speaker 2: It was a third worst since the nineteen eighties and.
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  Speaker 1: The third largest fiscal deficit on record, referred only to
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  Speaker 1: Queen twenty one, which recovered years, so absolutely excepit what grees.
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  Speaker 2: So the things that you mentioned in terms of physical deficit,
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  Speaker 2: there's definitely cause for concern. If Trump does doesn't increase
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  Speaker 2: or that reduces tax rates or keeps tax rates the same,
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  Speaker 2: then the income earned for from the federal government is less.
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  Speaker 2: So you know that both both parties are fiscally irresponsible.
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  Speaker 2: There's no doubt about.
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  Speaker 1: That more inflation could actually be good for a higher
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  Speaker 1: fiscal deficit because the US government could just inflate more
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  Speaker 1: of that did away, couldn't they correct?
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  Speaker 2: But also the biggest problem under the Biden administration, the
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  Speaker 2: differential between inflation and wages and wage growth and inflation
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  Speaker 2: growth or price growth if you like, was prices were
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  Speaker 2: three or four times higher than wage growth, and at
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  Speaker 2: the end wages were slightly ahead in terms of growth.
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  Speaker 2: And so if under a Trump administrator, more jobs are created,
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  Speaker 2: particularly in smaller companies because of tariffs and protectionism, then
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  Speaker 2: you know, wage growth should be hopefully above the three
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  Speaker 2: and a half percent that that inflation is. So you know,
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  Speaker 2: the whole premise of the Trump trade and the Trump
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  Speaker 2: election has really been the effect on the economy or
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  Speaker 2: the Biden administration. And you know, after after COVID, most
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  Speaker 2: most governments have been elected out, so you know, he
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  Speaker 2: was there with fiscal easing or least fiscal policy to
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  Speaker 2: to help create more jobs and keep the economy going.
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  Speaker 2: And the same happened in New Zealand, and you know
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  Speaker 2: we're paying the cost now, but that also caused high inflation.
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  Speaker 1: We aren't quite seeing the inflation potential expectations on the
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  Speaker 1: equities market, but it is playing out quite strongly on
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  Speaker 1: the bond market. Fin yields had been surging, they were
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  Speaker 1: pretty much vertical on that immediate election result. That means,
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  Speaker 1: with the inverse relationship, the bond prices are falling. What
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  Speaker 1: does that mean for fixed income investors that are in
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  Speaker 1: bonds and US treasuries at the moment and could it
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  Speaker 1: longer term signal actual better returns in US treasuries certainly.
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  Speaker 2: So in terms of the ten year tenure end of
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  Speaker 2: the curve is definitely a lot higher, but interest rates
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  Speaker 2: coming down at the short end, particularly for drop again
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  Speaker 2: by another twenty five basis points for the cash rate
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  Speaker 2: this Friday. There's definitely a steepening of the curve between
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  Speaker 2: the short term rates and long term rates, and so
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  Speaker 2: people will either move into shorter term products like the
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  Speaker 2: treasuries and the like, where the yields may go up
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  Speaker 2: because they're going to be borrowing more so therefore they
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  Speaker 2: have to offer more interest and more risk obviously, but
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  Speaker 2: also you know, people will move out of treasuries, long
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  Speaker 2: longer term treasure bonds, in long term corporate bonds into
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  Speaker 2: equities because equity markets are likely to rally from here.
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  Speaker 1: But coin bitcoin, where does that go from here? All
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  Speaker 1: time high on election night.
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  Speaker 2: Yeah, that's right. So I shares, black Rock has a
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  Speaker 2: it has a predominant ETF which started at the beginning
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  Speaker 2: of the year. That was up eight point eight percent overnight.
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  Speaker 2: And then if you look at the individual Trump trade
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  Speaker 2: stocks that could benefit from from bitcoin changes, coin Base
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  Speaker 2: was up thirty two percent this morning. And Marason Digital
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  Speaker 2: what nineteen percent, so significant increases in the in the
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  Speaker 2: prices of those related to bitcoin and cryptocurrency.
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  Speaker 1: How do you see a Trump presidency actually changing the
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  Speaker 1: game for bitcoin investors? Material? Is it?
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  Speaker 2: Hopefully over time there'll be more regulation of bitcoin. That's
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  Speaker 2: probably against Trump's thing in terms of regulation. But you know,
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  Speaker 2: people are investing in these sorts of products need certainty,
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  Speaker 2: and the likes of an ETF on bitcoin like the
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  Speaker 2: ib which is offered by Ice Shares and Black Crock,
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  Speaker 2: provides a way or mechanism of investing in these markets
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  Speaker 2: without having to store the bitcoin or worry about your
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  Speaker 2: passwords and all that sort of thing. So move movement
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  Speaker 2: towards some more certainty around the process of clearing and
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  Speaker 2: settlement and trading and security of the bitcoin will help.
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  Speaker 2: And and you know, definitely the likes of the ETFs
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  Speaker 2: helped with that, and that will that may long continue and.
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  Speaker 1: Now under this leadership it will be more help than hinder.
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  Speaker 1: You think cret in district.
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  Speaker 2: Correct, Yes, and definitely he has been a big proponent
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  Speaker 2: of bitcoin.
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  Speaker 1: What do you think, Greg the lesson should be for
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  Speaker 1: investors on the prediction market versus the polls is the
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  Speaker 1: lesson always follow the money.
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  Speaker 2: Well, it seems to be, doesn't it. So if you
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  Speaker 2: look at the polls right up till you know, the
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  Speaker 2: till the boats closed, it was a fifty to fifty game.
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  Speaker 2: Whereas the the the tipsters and the I could have
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  Speaker 2: said Trump was going to win for from weeks ago.
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  Speaker 2: So in the odds of you know, your payout being high,
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  Speaker 2: Honor trump victory was quite low. So you know, definitely
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  Speaker 2: follow the money and then that's whether what's happening at
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  Speaker 2: the moment.
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  Speaker 1: Thank you so much for your time, Greg. Always good
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  Speaker 1: to chat.
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  Speaker 2: Thank you, thank you,