E-minute understanding: What was the Trump deal that completely collapsed yesterday?

On Tuesday, the US and European stock markets experienced a significant pullback, with US stocks ending their previous upward streak as all three major indices fell, and major European indices also declined. Meanwhile, the US dollar and Treasury yields surged, putting pressure on non-US currencies, and most commodities fell sharply. As a result of this market trend, the previously hot "Trump trade" cooled off for a moment over the past week.

What is the "Trump Trade"

The "Trump trade" is a popular speculative theme in the current market, which actually refers to a series of market reactions based on expectations of changes in government policy following Trump's election as President of the United States. This trading strategy involves not only buying and selling decisions across various asset classes but also reflects investors' predictions and layouts regarding the economic and market impacts that Trump's policies may bring.

Core Points of the "Trump Trade"

The "Trump trade" has dominated market trends over the past few weeks, and expectations regarding Trump's policies will continue to be the main driving force behind market fluctuations for some time. Specifically, the "Trump trade" encompasses the following core aspects:

1. Stock Market: The market generally expects that Trump will implement policies such as tax cuts and deregulation, which are typically seen as favorable for the stock market, especially for industries that may directly benefit from policy changes, such as finance, traditional energy, and industrials.

2. US Dollar and Treasury Yields: The Trump trade is often associated with a stronger dollar and rising Treasury yields. The market anticipates that Trump's policies, such as tax cuts and increased infrastructure spending, may boost inflation and economic growth, thereby pushing up bond yields and attracting foreign investment, which in turn supports the dollar.

3. Cryptocurrency: Trump's friendly attitude towards Bitcoin is expected to create a favorable investment environment, providing a clear pathway characterized by deregulation and business-friendly policies, which are anticipated to drive the market further upward.
4. Gold: The Trump trade typically puts pressure on gold prices, as a stronger dollar and rising interest rates usually diminish gold's appeal as a safe-haven asset.
5. Trade Policy: The Trump administration's protectionist trade policies, such as increased tariffs and trade barriers, may impact global trade and specific industries. For instance, companies with high export dependence may face challenges.

6. Commodities: The impact of the Trump trade on commodities is mixed. For example, Trump's support for the energy sector may drive up oil prices, while his stance on global trade may affect the prices of industrial metals like copper.

The "Trump trade" illustrates how policies can influence markets, thereby creating investment opportunities. It is important to note that the "Trump trade" is not static; it will change with the implementation of Trump's policies, shifts in market sentiment, and the evolution of the global economic environment.

xw

This issue of "E-Minute Understanding" aims to help investors better cope with similar situations in the future by understanding this market reaction pattern, laying the foundation for long-term investment strategies. As a global partner of the Argentina national team, 4E offers a one-stop trading platform covering over 600 assets, including cryptocurrencies, US stocks, indices, forex, and commodities, and has specially launched a beginner simulation account to help everyone get started easily. If you are interested in investing, you might want to visit eeee.com to experience the convenience and security of professional trading.