Currently, there is still some time until the US presidential election in November, yet investors have begun to bet on Trump's return to the White House. The energy, industry, finance sectors, and cryptocurrencies have all risen, and solar energy and other clean energy stocks have been sold off.

However, some of Trump's remarks during his last term led to a reversal in stock market trends, so nothing is certain. It's too early to adjust the portfolio for “Trump 2.0.” Although he is leading in most polls, the Democratic Party is likely to make a comeback with another candidate after Biden withdraws from the election campaign.

Even if Trump wins, the policy changes and their impact are far from clear, and largely depend on Congress: according to Wolfe Research, the biggest policy changes in the past 15 years all occurred when both houses of the Senate and the White House were controlled by the same party. Without Republicans controlling both houses, Democrats could set up “roadblocks” on tax cuts, tariffs, and other items on Trump's agenda.

How to invest depends on whether investors are trading elections or looking for long-term bets. In the former case, investors can find many “Trump-friendly” investments. For example, Wolfe Research believes that finance and traditional energy will get the most “incremental upside,” and cryptocurrencies may get a boost. However, betting on the industry is a more blunt way to invest, especially from a long-term perspective, because economic dynamics and corporate behavior are more important than policy changes in Washington.

Here are a few key industries involved in the “Trump Deal” and what investors who want to participate in it before the election need to consider.

Conventional energy and clean energy

The slogan of the 2024 Republican Party's campaign platform is “Drill baby drill” (Drill baby drill), which is a somewhat empty slogan. During his first term, Trump strongly supported the fossil fuel industry and was hostile to renewable energy (he pulled the US out of the Paris Climate Agreement), but the overall return on the energy industry fell 30% during his term due to the COVID-19 pandemic and low oil prices. Although Biden implemented the “Green New Deal” and re-joined the Paris Climate Agreement, the energy industry's total return during his tenure was 148%.

With global oil and gas oversupply, producing more oil in the US is not what the energy industry wants. The Republican Party's goal is to increase US oil production by 3 million barrels per day, but oil companies probably won't be keen to do this because increasing production would further depress oil prices. Recently, J.P. Morgan (J.P. Morgan) energy industry analysts pointed out in a report that even the price of oil at $60 per barrel is too low to stimulate production. As a by-product of oil production, the price of natural gas will also drop sharply as supply increases in an already saturated market. Furthermore, ending the Russian-Ukrainian conflict as soon as possible — another Trump goal — may allow more Russian gas to enter the market, thereby reducing prices.

Reasons to invest in energy include:$Exxon Mobil (XOM.US)$The financial efficiency of such “supergiants” has improved; large-scale mergers and acquisitions have promoted the consolidation of the energy industry; President Trump's election may delay the transition to renewable energy and electric vehicles, thus keeping oil and gas demand at a relatively strong level for a longer period of time.

Evercore ISI analysts believe Trump's victory is good for ExxonMobil and Oil Services$Halliburton (HAL.US)$, they think gas companies$EQT Corp (EQT.US)$It will also be boosted if Trump lifts Biden's ban on suspending construction of new LNG terminals as scheduled. Other companies related to this subject include$Cheniere Energy (LNG.US)$ with$Sempra Energy (SRE.US)$, and$Kinder Morgan (KMI.US)$ ,$Targa Resources (TRGP.US)$ with$Williams (WMB.US)$Wait for the pipeline company.

Clean energy — a huge field that includes wind energy, solar energy, battery technology, and electric vehicles — the opposite is likely to be true. Solar energy stocks have fallen sharply recently, utility companies that rely on wind power$Vistra Energy (VST.US)$ Shares fell more than 10% in July.

Trump said he would abolish subsidies for clean energy and electric vehicles, but that's a lot harder than talking about it. Many of the subsidies in the Inflation Reduction Act (Inflation Reduction Act) have boosted the development of new factories and manufacturing industries in Republican constituencies, and even if the Republicans control both houses of Congress, repealing the bill would be blocked in Congress.

Trump can take other actions through executive orders and changes to the Treasury Department and IRS practices to make it harder for consumers to apply for electric vehicle subsidies. Proponents of Trump$Tesla (TSLA.US)$CEO Elon Musk (Elon Musk) said he didn't care. He said, “Let's remove the subsidy; this will only help Tesla.” However, other electric vehicle manufacturers may be affected, such as stocks being sold off after Trump's approval rating rose$Rivian Automotive (RIVN.US)$ .

Some industrial companies in the automotive and clean energy sectors may also be adversely affected, Baird analysts believe, including$Lincoln Electric (LECO.US)$ with$Illinois Tool Works (ITW.US)$ Wait for the company.

Banks and cryptocurrencies

Deregulation is likely to be a good wind for the financial industry, and large banks and finance companies considered systemically important will be happy to see the relaxation of capital requirements. The “Project 2025” (Project 2025) proposed by conservatives called for abolishing the US Financial Industry Supervisory Authority (Finra)'s status as an independent entity and merging it with the US Securities and Exchange Commission (SEC).

During Trump's second term, if the US economy accelerates growth and interest rates fall, loan activity will become more active, and the financial industry will be the winner. This could also happen during the term of another Democratic president, so the Federal Reserve may cut interest rates for the first time in September this year. However, the Republican Party's tax and trade policies may once again trigger inflation, which in turn will further complicate the Federal Reserve's interest rate cut plans for this year and next.

Wall Street's biggest hope is an increase in merger and acquisition activity, for$JPMorgan (JPM.US)$,$Goldman Sachs (GS.US)$,$Morgan Stanley (MS.US)$und$Citigroup (C.US)$Wait for investment banks to bring in a new billing cycle. Rich Nuzum (Rich Nuzum), global chief investment strategist at Mercer (Mercer), believes that if Trump wins, M&A activity is more likely to increase.

However, Trump's vice presidential candidate J.D. Vance (JD Vance) supports US Federal Trade Commission (FTC) Chairman Lina Khan (Lina Khan) appointed by Biden, who has always been “hostile” to mergers and acquisitions in technology and other industries. Some analysts believe that no matter who enters the White House, large-scale mergers and acquisitions will be difficult to reach.

Trump once said,$Bitcoin (BTC.CC)$It's a “scam,” but now, the Republican Party is proposing to protect cryptocurrencies in the 2024 campaign platform, and Trump has also accepted campaign donations in cryptocurrencies, mainly Bitcoin and Ether. There is a general perception that Republican heads of regulators such as the SEC will be more open to crypto products and services, thus ending the “hostile” period for SEC Chairman Gary Gensler (Gary Gensler) to cryptocurrencies.

Bitcoin and$Coinbase (COIN.US)$ As well as the one that launched a Bitcoin ETF$Blackrock (BLK.US)$As fund companies become beneficiaries, more cryptocurrencies may be launched in the future. However, the question of the survival of cryptocurrencies may also require a court to resolve: which cryptocurrency transactions fall within the scope of SEC regulation. The relevant case is currently being tried by the judicial authorities and is likely to be brought to the Supreme Court. This process may take several years.

Some financial advisors recommend holding a small amount of cryptocurrencies in a diversified portfolio, but don't allocate more than 5% to 10%. The Republican Party's promise to “defend Bitcoin mining” will be beneficial$Marathon Digital (MARA.US)$ with$Riot Platforms (RIOT.US)$ Mining companies, however, ultimately influence their stock performance is Bitcoin's price and global demand trends.

Technology industry

Regardless of who wins the election, big tech companies will face trade and regulatory hurdles. The technology industry will be impacted by trade frictions between the US and China. Trump's comments on Taiwan have injected more instability into an already fragile situation. Additionally, there are reports that Biden may consider increasing restrictions on Chinese chip exports.

Vance is an uncertain factor. Although he is associated with the technology industry, he is also critical of the growing power of the technology industry. He supports Khan's opinion$Alphabet-A (GOOGL.US)$),$Amazon (AMZN.US)$und$Meta Platforms (META.US)$Wait for the company to take action.$WisdomTree (WT.US)$Jeff Weniger (Jeff Weniger), head of stock strategy, said, “Khan has always been relentlessly chasing the “Big Seven,” but we have seen some easing of concerns surrounding the Republican Party putting more pressure on big tech companies. We will wait and see if Vance causes this concern to heat up again.”

Of course, the reason we are optimistic about technology stocks is artificial intelligence, and currently semiconductor companies benefit the most from it. As soon as consumers and businesses begin to see artificial intelligence more integrated into devices and software,$Apple (AAPL.US)$,$Microsoft (MSFT.US)$Compared to blue-chip technology stocks such as Alphabet [they compare$NVIDIA (NVDA.US)$[Cheap] might get a bigger boost.

Investors should not drastically adjust their portfolios for political reasons. The victory of the Democratic presidential candidate means that the status quo will not change much. This is also very good: supported by innovations such as a healthy economy, artificial intelligence, and GLP-1 diet pills, and the easing of inflation, the US stock market is currently close to an all-time high.

Don't forget, according to Vanguard's data, since 1860, the 60% stock and 40% bond portfolios have performed almost the same during the Republican presidency and the Democratic presidency. The average annual return during the Republican presidential term was 8.1%, and the average annual return during the Democratic presidential term was 7.7%.

When the White House and the Senate are controlled by the same party, the return on investment is higher: Evercore data shows that since 1928, when both the White House and the Senate were controlled by the Democratic Party or the Republican Party,$S&P 500 Index (.SPX.US)$The average annual return is about 9%, which is far higher than 6% during the divided government period.

If investors are really worried about the election, they can consider investing in gold. Recently, gold has continued to hit new highs and seems to have joined the “Trump deal”. The main reason for the rise in gold prices is geopolitical turmoil and US inflation may be heating up again due to Trump's policies.

“Gold stands out as a winner,” J.P. Morgan's strategist wrote in a report. They also pointed out that structural bullish factors are likely to remain the same, including concerns raised by debt, trade, and “America First” rhetoric.

Gold has no place in the Republican Party's agenda, which is probably a good thing considering all the loud voices in “Trump politics.”

edit/emily