Since Donald Trump's victory on November 6, the "Donald Trump concept" has gained increasing popularity, with US Treasury rates rising to 4.5%, the USD crossing 108, bitcoin nearing $100,000 each, and gold declining. In the era of Trump 2.0, Trump's political capital and administrative efficiency may far exceed that of 1.0, with more aggressive policy measures in the areas of economy, immigration, foreign trade, and government reform.
Recently, the nominees for his cabinet have been coming out, making related policies more concrete and further strengthening the Trump concept. Next, the order and path of advancing Trump's various policies will directly determine the rhythm and even direction of the Trump concept.
Analysis indicates that Trump 2.0's policy may still be within the framework of 1.0, but the pace may accelerate, and domestic and foreign policies may become more assertive. Trump may be more firm in practicing the "America First" principle, implementing tougher immigration and trade policies.
Before Trump's inauguration (now - January 20, 2025): Nominees for cabinet members.
Compared to the first term, the nominations for Trump's second term reflect several characteristics:
1. Rapid cabinet formation, with the White House Chief of Staff confirmed just two days after the election. As of November 16, nearly half of the 15 cabinet minister nominations had already been made, and five cabinet-level members had also been nominated, while the same progress took at least over three weeks in 2016.
2. Greater emphasis on "loyalty"; many of Trump’s nominees are staunch supporters from the previous term and this election cycle, even if some candidates appear to lack sufficient work experience in relevant fields, such as Secretary of Defense Pete Hegseth, who is currently a Fox News host.
3. Establishing new departments; while nominating cabinet members, the establishment of the "Department of Government Efficiency" was also announced, to be overseen by Elon Musk and Vivek Ramaswamy, aimed at reducing bureaucracy and cutting wasteful spending, with the requirement that the department's work must be completed by July 4, 2026.
It's worth noting that key officials related to the economic market, such as the Treasury Secretary and the Trade Representative, are still undecided. According to the latest news from The Wall Street Journal, Donald Trump has proposed Kevin Warsh, a former Fed governor, to be the U.S. Treasury Secretary. Meanwhile, Robert Lighthizer is speculated by the media to be the candidate for the U.S. Trade Representative.
Additionally, the future of the Federal Reserve Chairman has also drawn attention. Jerome Powell's second term as Federal Reserve Chairman will last until May 2026. After the November FOMC meeting, he stated that he would not resign proactively, and legally, Trump cannot remove him from office.
Phase One (January 20, 2025 - around the second quarter of 2025): Promises such as illegal immigration deportation actions, deregulation, and negotiations between Russia and Ukraine will be quickly implemented.
After Trump officially takes office on January 20, 2025, his team will accelerate the fulfillment of some campaign promises, quickly advancing during the initial period dubbed the "First 100 Days Policy." Key policies include:
1. In the diplomatic field, initiating negotiations for a ceasefire between Russia and Ukraine, and reducing U.S. foreign aid expenditures.
Diplomatic policies will be more hardline. Several already nominated or potential core officials, including Secretary of State Marco Rubio, Defense Secretary Pete Hegseth, and National Security Advisor Michael Waltz, advocate relatively "hawkish" policies.
2. In the immigration sector, restarting immigration and border security policies, launching large-scale illegal immigration deportation actions, resuming the construction of the U.S.-Mexico border wall, and expanding law enforcement against illegal immigration.
The initiation of illegal immigration deportation actions is highly certain and will be more stringent. Strengthening border security is a consensus among many, including Vice President JD Vance, nominated Secretary of State Marco Rubio, Attorney General Matt Gaetz, Homeland Security Secretary Kristi Noem, and Director of National Intelligence Tulsi Gabbard. Tom Homan, the new Border Affairs Chief appointed by Trump, stated that there will be "the largest illegal immigration deportation plan in history."
Related concept stocks: $The GEO Group Inc (GEO.US)$ 、 $CoreCivic, Inc. (CXW.US)$ According to documents filed with the U.S. Securities and Exchange Commission (SEC), some of the most prominent actions Third Point took in the second quarter, respectively, were to establish positions, shareholding of and more.
3. In the energy sector, once again withdrawing from the Paris Agreement and relaxing emissions limits on fuel vehicles.
Returning to traditional energy is relatively certain. The nominated Secretary of Energy Chris Wright, Secretary of the Interior Doug Burgum, and EPA Administrator Lee Zeldin all advocate for a return to traditional energy, stating they will support the development of domestic fossil fuels to increase supply, and plan to overturn some major climate decisions made by the Biden administration, such as vehicle emissions regulations.
Related concept stocks: $Chevron (CVX.US)$ 、 $Exxon Mobil (XOM.US)$ 、 $ConocoPhillips (COP.US)$ According to documents filed with the U.S. Securities and Exchange Commission (SEC), some of the most prominent actions Third Point took in the second quarter, respectively, were to establish positions, shareholding of and more.
4. In the financial sector, relax bank regulatory regulations.
Donald Trump's main financial proposal is to relax financial regulations. The final rules of Basel III for the USA banking industry are still under discussion, and Donald Trump 2.0 may delay the implementation of the capital adequacy ratio increase rules for the USA banking industry. According to Bloomberg's forecast, if Trump is elected, the likelihood of the final implementation of Basel III rules is only 30%, and implementation may be delayed for at least a year.
Last week, JPMorgan CEO Jamie Dimon stated that Wall Street is excited about the prospects of President Donald Trump reducing regulations and revitalizing the banking industry during his second term. Wall Street analysts expect that Trump's victory will change the regulatory game for the banking industry; the Trump administration will alleviate regulatory burdens, and bank stocks may benefit from lowered capital requirements.
Related concept stocks: $JPMorgan (JPM.US)$ 、 $Bank of America (BAC.US)$ 、 $Wells Fargo & Co (WFC.US)$ 、 $Goldman Sachs (GS.US)$ 、 $Morgan Stanley (MS.US)$ According to documents filed with the U.S. Securities and Exchange Commission (SEC), some of the most prominent actions Third Point took in the second quarter, respectively, were to establish positions, shareholding of and more.
In the field of cryptos, the first-ever White House position dedicated to cryptocurrencies is proposed.
According to media reports, the Donald Trump team is discussing with the digital assets industry whether to establish a new position in the White House responsible for cryptocurrency policy. On Thursday, November 21, Eastern Time, Fox News reported that Chris Giacarlo, a lawyer nicknamed "the father of cryptocurrency" in the crypto circle, is the strongest candidate for the new White House position. The Trump transition team is considering appointing this new government position to help promote the growth of the $3 trillion digital assets market.
Related concept stocks: $MicroStrategy (MSTR.US)$ 、 $Riot Platforms (RIOT.US)$ 、 $MARA Holdings (MARA.US)$ And
Phase two (Q2 2025 - end of 2026): Focus on advancing core policy measures including tax cuts and tariffs.
The core of trump's economic policy is the combination of "tax cuts + tariffs". Domestically, Trump may promote a new round of tax cut legislation and extend the effectiveness of the TCJA (Tax Cuts and Jobs Act).
The tax cut policy is expected to be legislated by 2025. Given that most personal income tax provisions in the 2018 tax reform act will expire in January 2026, Trump could possibly accelerate the promotion of tax cut policies after taking office. The Republican Party can still push for tax cuts through the "budget reconciliation process", requiring only a simple majority (51 votes) in the Senate for the bill to pass.
The policies that have a significant incremental impact on the economy mainly include Trump's new proposals for 2024, such as reducing corporate taxes to 15%, exempting social security income from taxes, and exempting consumer income from taxes. The tax reduction policy may also further expand the fiscal deficit, with the Tax Foundation estimating that Trump's tax cuts could reduce tax revenues by 7.8 trillion dollars over the next ten years, averaging about 770 billion dollars per year, equivalent to 17% of 2024's fiscal revenue.
Externally, it is expected that in the second quarter of 2025, Trump may simultaneously start negotiations for the first phase agreement and initiate a new round of trade disputes.
The direction of imposing tariffs internationally is relatively certain, but there may be differences in extent and scope. Vice President Vance and the nominated Secretary of State Rubio both support raising tariffs to promote the development of American manufacturing. Assuming that mid-next year, the USA imposes a 60% tariff on China and that China simultaneously retaliates, the trade war may lead to a 0.16% decline in US GDP next year; if, on this basis, the USA imposes an additional 10% general tariff globally, it may lead to a 0.72% decline in US GDP.
In addition, Trump may also promote trade negotiations with Europe, Japan, and Mexico. The timing for the implementation of trade policies may be adjusted based on the economic recovery situation and the arrival of key officials. Referencing the experience of the first term, Trump may accelerate tariff policy after the trade representative assumes office.
Tax reductions and tariffs have opposite effects on the US economy, but the overall impact is expected to lean positive. According to the Tax Foundation's estimation, Trump's comprehensive economic policy may boost long-term GDP growth in the USA by 0.8 percentage points, with tax reductions contributing 2.4 percentage points and tariff policies dragging down by 1.7 percentage points. Financially, the revenue loss caused by tax reduction policies is difficult to offset by the income from newly added tariffs, and the long-term deficit rate in the USA may expand by about 1 percentage point. In terms of US stocks, Trump's tax reduction policies are bullish in the medium to long-term, supporting corporate profits and benefiting the US stock market as a whole, especially in cyclical sectors with currently high effective tax rates.
Related concept stocks: $The Kroger (KR.US)$ 、 $Dollar General (DG.US)$ 、 $Stanley Black & Decker (SWK.US)$ 、 $Southwest Airlines (LUV.US)$ 、 $Builders FirstSource (BLDR.US)$ And
Phase three (end of 2026 to 2028): Deepen the reform of the "deep state" and promote unfinished matters from the first term.
The Republican Party will face midterm election pressures at the end of 2026. If they can successfully maintain the majority in both the House and Senate, Donald Trump may further carry out long-term reforms on the USA's political system, including cleaning up the structure of the "deep state," reorganizing the judicial system, and adjusting foreign policy priorities. This process may adopt a "gradual" implementation method to ensure long-term effects while reducing internal policy resistance.
Based on the pace of policies in the first term and the new characteristics of the cabinet in the second term, it is expected that in 2025, Trump's policy implementation will mainly focus on the first and second phases. The expected rhythm and timing of key policy rollouts are as follows.
How should one invest in the "Trump 2.0 era"?
Recently, Goldman Sachs, Morgan Stanley, UBS Group, and many other institutions have released research reports bullish on the U.S. stock market outlook for next year, and have successively raised the target price of the s&p 500 index. Wall Street expects policies such as tax cuts proposed by Trump to drive significant growth in U.S. stock and corporate earnings in the coming years.
So far this year, the s&p 500 index has risen nearly 25% and previously broke through the important psychological barrier of 6000 points.
Goldman Sachs predicts that the s&p 500 index will rise to 6500 points by the end of next year, an increase of over 9% from current levels. The famous Wall Street bear - Morgan Stanley's Chief Investment Officer Michael Wilson also raised the s&p 500 index target price for the end of next year to 6500 points. The Bank of Montreal's capital markets outlook for U.S. stocks is more optimistic than forecasts from other investment banks, predicting that the s&p 500 index could reach 6700 points by the end of next year, more than 12% higher than current levels.
To prepare for a longer-lasting bull market, Goldman Sachs analysts cite Trump's 1987 investment guide "The Art of Trading" as a roadmap for investment secrets. Based on this book, Goldman Sachs proposes four investment recommendations for "Trump 2.0":
“Think Big” - Focus on the big picture, paying attention to opportunities in leaders and middle cap stocks.
Trump wrote in his book: “I like to think big. If you are going to think anyway, you might as well think big.” Goldman Sachs stated that this is the motto for stock investors in 2024, and it should not be overlooked in the future.
Considering the overall earnings growth improvement of the S&P 500 index, Goldman Sachs suggests that investors should maintain exposure to the “seven leading stocks” (which have performed excellently since the end of 2022) while focusing on middle cap stock opportunities in 2025, and points out the potential gains brought about by trade policies and economic growth. Furthermore, Goldman Sachs recommends that investors look for stocks related to revenue and small to medium-sized businesses, as that market segment performed well during Trump’s first presidential term, and the improved market sentiment may drive another rebound.
“Maximize Your Choices” - Opportunities in the merger and acquisition market.
Goldman Sachs advises investors to hold a basket of possible merger and acquisition candidates, as M&A activity may increase in 2025. Goldman Sachs predicts that cash spending on M&A will grow by 20% in 2025, with over 750 U.S. M&A transactions expected to be completed. This strategy aims to reduce investment risks because historically, the performance of merger candidates has often exceeded market averages. For example, during Trump’s first term, the merger candidate portfolio tracked by Goldman Sachs outperformed the S&P 1500 equal weight index by 300 basis points.
Trump wrote in his book, “Maximize your choices: I never get too obsessed with a deal or a way of doing things. I will handle multiple options simultaneously because most deals fail, no matter how promising they seem at first.”
“Realize Your Gains” - Artificial Intelligence.
Goldman Sachs anticipates that by 2025, investment trends in artificial intelligence (AI) will surpass the phase focused on hardware manufacturers and infrastructure. The market may begin to push for companies that can monetize through AI, many of which belong to the software and services sector, including $Q2 Holdings (QTWO.US)$ 、 $Fortinet (FTNT.US)$ and $Meta Platforms (META.US)$And many other companies may also be negatively affected in the automotive and clean energy sectors.
"You can't fool people, at least not for too long. You can create hype, you can do great publicity, get attention from various media, and you can exaggerate a bit. But if you don't deliver on your promises, people will eventually figure it out," Goldman Sachs quoted Trump.
“protect downward trends” - positioning in defensive sectors
The current economy is favorable for sectors sensitive to cyclicality, and goldman sachs recommends increasing positions in sectors such as materials, software, services, and utilities. In the words of donald trump: "Protect against adverse factors, and favorable factors will emerge automatically."
Goldman sachs stated that the software and services sector has the least dependence on macroeconomic changes, while the materials sector currently has a low valuation, making it a good value investment opportunity. Additionally, goldman sachs believes that utilities serve as a valuable hedge to prevent the adverse effects of an economic slowdown from really occurring.
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Editor / jayden
