Source: Jin10 Data
Analysts pointed out that Trump's remarks are more unstable and unpredictable, which short-term traders like due to big fluctuations.
Trump's casual style of action may once again make the financial markets volatile, which is just what a group of short-term traders around the world who rely on such volatility for profit want.
Trump and Biden are in a neck-and-neck race in the polls ahead of their first debate on Friday morning, and investors are speculating what impact a re-election of Trump may have.
The market typically does not like this kind of uncertainty, but for a type of hedge fund that specializes in quickly entering and exiting the market during big swings and abnormal price movements, this uncertainty is almost irrelevant.
What they see in Trump is something much simpler: Trump's comments and social media posts during his tenure can sometimes surprise investors and cause violent short-term fluctuations in stock, bond, and currency prices.
Calvin Yeoh, the portfolio manager of hedge fund Blue Edge Advisors based in Singapore said:" Trump's comments are more unstable and unpredictable. Politics aside, if you ask a trader whether he prefers the calm Biden or the erratic Trump, the trader will choose big volatility, so he will choose Trump "
Of course, volatility has not been lacking during the Biden era. Surging inflation, the Russia-Ukraine conflict, and the Fed's hike have all greatly disrupted the market. As a result, some broad indicators that measure market volatility are much higher than during most of Trump's tenure, and if Biden wins reelection, his conflicts with the Republican Party over issues such as the debt ceiling may escalate.
With more than four months to go until the election, the market so far has focused on the strong performance of the US economy and speculation about when the Fed will begin cutting interest rates. However, there are already signs in the market that investors are preparing early for the volatility that may intensify during the November election, especially in the event of uncertain election results.
Vineer Bhansali, founder of LongTail Alpha Asset Management, said:" The consensus is that Trump will bring volatility to the market, which has already been priced in. "
Even some investors who take long-term fundamental-driven strategies expect that political changes brought about by Trump will create profitable opportunities.
Carol Lye, portfolio manager at Brandywine Global Investment Management, said:" Trump's noise can sometimes create opportunities." She mentioned the decline of the Mexican peso at the end of 2016, when Trump promised to build a border wall, and then the peso rebounded in 2017.
Trump and Republicans have made it clear that if Trump is re-elected president, they will push to extend the comprehensive tax cuts implemented in 2017. However, Biden and Democrats have also hinted that they hope to extend at least part of them.
Trump is also expected to be more aggressive in expelling illegal workers in the United States and calling for tariffs. Both measures could increase inflationary pressures, resetting market expectations for rate cuts.
Some informal Trump advisers have proposed reforming the Federal Reserve, which would give Trump more power over the central bank. Although he and his campaign team have not supported this move, it is almost certain to stir up the bond market, as people are concerned that the Fed will be pressured to cut rates for political reasons.
George Boubouras, research director at hedge fund K2 Asset Management Ltd., said:" You have to face the elephant in the room, that no matter how the scenario of Trump's victory develops, every word he says will be amplified in North America and around the world. We like volatility in the market, but we try not to get too caught up in Trump's emotional expressions during his potential tenure."
Editor/Lambor