After Biden performed poorly in the debate with former President Trump last week, the US presidential election became the focus of the market. As Morgan Stanley's strategist pointed out earlier this week, Trump's clear victory in the debate pushed some investors to return to the "2016 value and cyclical investment script", and energy, finance, industry, materials, and small-cap stocks performed well last Friday. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.

In short, some investors hope that the market will replay the story of Trump's previous term - fiscal expansion, inflation heating up, and reduced regulation. Morgan Stanley warns that we are still in the early stages of the election, and there is much more resistance to inflation heating up at this time.

What can investors gain from a potential Trump victory? Economist Nouriel Roubini, who is known as the "Dr. Doom" for frequently making pessimistic predictions, warned that Trump's second term could trigger a trade war that could harm US stocks.

In an interview on Tuesday, Roubini said, "I think protectionism will lead to gradually rising inflation, which will be a concern, of course, for the bond market as well."

"However, since our trading partners may also impose tariffs on the United States, trade friction upgrades or comprehensive trade wars with other regions of the world will also pose a threat to US stocks. Global trade wars are not good for the stock market."

The professor speculates that Trump's plan will involve a 10% tariff on all goods imported from the United States, including allies from Europe, Japan, and South Korea.

"The biggest problem will be whether he will continue to do so or propose a carrot and stick policy." He said that if Europeans change some of their trade policies or increase defense spending, they may get a breather. "But the problem is that any tariff is a regressive tax that will push up import prices and lead to higher inflation." Under a regressive tax system, low-income people actually bear a larger proportion of the tax burden.

"One argument is that the Trump administration may try to force some countries to accept a depreciation of the US dollar. "However, in terms of the impact on inflation, this is similar to imposing tariffs universally."

Some institutions, such as the independent think tank OMFIF, which researches central bank businesses, have already been very clear that the strategy of trying to depress the US dollar exchange rate has flaws. They all believe that increasing tariffs may cause US inflation to heat up, "raising US bond yields, exacerbating risk aversion, and possibly boosting the US dollar."

Meanwhile, Goldman Sachs chief economist Jan Hatzius also warned that Trump's import tariff plan could lead to the Fed raising interest rates five times more.The Fed has raised interest rates five more times.

Edited by Jeffrey