To The Moon

As the 2024 US election draws ever closer, the eyes of global investors are once again focused on this political extravaganza. This year, we may see Trump and Biden face off again, and the policy ideas and electoral changes of both candidates will undoubtedly have a profound impact on global markets.

State of the Election: Swing States Become Key Battlegrounds

• Trump has a significant lead in swing states, particularly in Nevada, North Carolina and Georgia.

• Dissatisfaction with the Biden administration is running high, and Trump has a narrow lead.

policy assertion

• Trade policy: Both candidates favor high tariff policies, which could put pressure on global supply chains and push up inflation.

• Investment Spending: Infrastructure and manufacturing investment has become a bipartisan consensus, signaling a potentially massive investment program ahead.

• Tax policy: Trump's push for tax cuts and Biden's preference for fiscal stimulus and tax increases on the wealthy differ significantly.

• Industrial Policy: Democrats favor the return of high-end manufacturing, while Republicans focus more on traditional energy and low-end manufacturing.

• Immigration Policy: Democrats have a moderate policy, Trump has a strict policy but has recently softened his attitude.

Policy implications: inflation and market volatility

1. Inflation

• Trade policy: High tariffs may increase the cost of imports and push up commodity prices, thus exacerbating inflationary pressures.

• Investment spending: Large-scale investments in infrastructure and manufacturing could boost demand and further push up price levels.

• Subsidy policy: Subsidies for specific industries, such as clean energy, may increase the cost of related products and indirectly affect the overall price level.

2. Monetary policy constraints

• Rising inflation could limit the Fed's room to cut rates because of the need to maintain price stability.

• If growth is boosted by trade policy and fiscal stimulus, the Fed may be more inclined to wait and see than to ease.

3. The debt ceiling and the supply of national debt

• The entry into force of the debt ceiling in January 2025 could lead to volatility in the supply of Treasuries, affecting bond rates.

• If the debt ceiling issue drags on, it may first release Treasury funds and subsequently increase debt issuance, leading to tighter market liquidity and higher interest rates.

• The U.S. Treasury may have to rely on continued short-term bond issuance to fill the gap

4. Changes in the structure of the United States stock market

• Different policy ideas may have different impacts on different sectors, leading to changes in the structure of the U.S. stock market.

• For example, tax cuts may boost cyclical stocks, while reductions in subsidies to high-tech industries may affect technology stocks.

5. Economic growth

• Fiscal stimulus and infrastructure investment may boost growth in the short term, but the long-term impact depends on the sustainability of the policies.

• Tax cuts may stimulate consumption and investment, but they also increase the fiscal deficit.

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