To The Moon

Following Trump's election in 2016, markets reacted quickly, with the U.S. dollar and U.S. equities rising sharply while gold and U.S. bonds weakened.20 A similar pattern reappeared during the 2024 election, as market expectations of a Trump victory drove up underlying assets, including bitcoin and the U.S. dollar.

In the short term, the market may see an inertial reaction in anticipation of the policy, but as implementation progresses, the market will reassess its impact. $US10Y(US10Y.BOND)$ $US30Y(US30Y.BOND)$ $.SPX(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $Invesco QQQ(QQQ)$ $.IXIC(.IXIC)$ $iShares 20+ Year Treasury Bond ETF(TLT)$

Rhythm and nodes of the Trump deal

Current Nodes

• After the November 6 election results: the Trump trade did not "cash in on the good" but instead strengthened as US bond rates surged higher, the US dollar index reached highs, Bitcoin rose, gold fell, and China's markets came under pressure.

• After Besant's nomination as Treasury Secretary in mid-November: the Trump deal reached a stage high, and US bond rates and the US dollar weakened on profit-taking from the highs.

Key points and implications ahead

• January 3 Congressional renewal: Congressional renewal may first discuss the debt ceiling issue, mulling the cancellation of some existing policies, such as initiating the repeal process for Biden's electric car mandates and other policies.

• January 20 officially inaugurated: announced a series of executive orders, covering immigration, tariffs, climate agreement, electric car mandatory order, Russia-Ukraine dispute and other policies, the executive order progress faster than the legislative process, the degree of its impact on inflation will produce different market reactions.If the relevant policies are pushed forward on a large scale, they may significantly push up inflation and have a greater impact on the country where tariffs are imposed; if the policies are mild, the impact will be relatively limited.

• January-February speech to Congress: the President will deliver the State of the Union address to a joint session of Congress, describing the analysis of the national situation, the legislative agenda and the views of the country's priorities, Trump or to reaffirm the governing philosophy, the trade friction and other issues to give more points of view.

• February-March new fiscal year budget: the federal budget process involves a number of policies, such as tax reform, tariffs, government spending, energy infrastructure investment, etc., the new fiscal year budget will provide details of fiscal policy and the direction of the deal, Trump may turn to tax cuts earlier, and the current round of growth policies may be launched earlier.

Will Trump's policies necessarily materialize at pace?

Realistically, there are three main constraints

• Inflation constraint: this is the primary constraint.Trump's election was a comprehensive victory, the election by the Democratic Party's policies and high inflation, the current U.S. inflation has fallen but is not yet stable, the residents of the high inflation experience is still fresh in their minds.If its contraction of supply policy is too strong to promote inflation out of control, will trigger a public opinion backlash, so the inflation issue in a period of time will have a key impact on public opinion, and then on the policy to promote the pace and strength of a greater impact!

  

  Time constraint: the midterm election is the ruling satisfaction test node. 2018 midterm election Democrats took back the House of Representatives to Trump's ruling has brought a lot of obstacles, although this time the Republican Party won, but the Congress will usher in the midterm election again in 2026, so in the current pattern of inflation, Trump in the first two years of his term of office on the advancement of supply policy (immigration and tariffs) may have a certain "concern".Trump may have some "concerns" about supply policy (immigration and tariffs) in the first two years of his term, or he may take other hedges to depress inflation and deliver positive policy messages earlier, a constraint that will have an impact on the pace of policy advancement.

• Moderate voice: Moderate Treasury Secretary Besant's nomination provides balance.Its "333" philosophy is relatively more balanced, prioritizing tax cuts, and there has been positive feedback from the markets.This factor affects the direction and strength of the policy push to some extent, but its direct constraints are relatively weak compared to inflation and time constraints.

Asset trading tempo

Overall, asset classes still tend to maintain their oscillator trends over the next 3-6 months.

• In the short term, the Trump deal may manifest itself as a phased pause, a "correction" to the over-counting of expectations in the early period.

• Attention needs to be paid to the pace of policy and key junctures after Trump takes office, and this pause cannot simply be interpreted as a reversal similar to the Trump deal in early 2017.

• Growth-oriented policies are likely to return to investors' attention after Trump's inauguration, especially after March, which could provide a significant boost to risk appetite.

• If policies go well, this could further strengthen the performance of US bonds, the US dollar, and US equities along with pro-cyclical sectors; conversely, if policies do not move forward smoothly or something else happens, the performance of these assets could suffer.

• Watch the implementation of Trump's policies, including immigration and tariffs.For example, mass deportation of immigrants and imposition of high tariffs may push up inflation and have a greater impact on the market.

• Trump's policies may affect U.S. bond yields, the trend of the U.S. dollar, etc., which in turn may affect the prices and market performance of overseas assets.

• Trump's possible trade protectionist policies, such as imposing tariffs, may trigger trade friction and affect the economies and markets of relevant countries.

• It is important to keep an eye on Trump's policies in areas such as infrastructure and energy, which may create opportunities or challenges for related sectors and assets.

• Keep an eye on the Trump administration's fiscal policies, such as the tax cut program, whose impact on corporate earnings and economic growth will also be reflected in asset prices.