With Election Looming, Wall Street Bets on Trump: Dollar, DJT, Bitcoin to be Biggest Winners?

With Election Looming, Wall Street Bets on Trump: Dollar, DJT, Bitcoin to be Biggest Winners?As the US election enters its final stretch, Wall Street is scrambling to make its last bets. Currently, the market is most heavily focused on bets on US treasuries, the dollar, Bitcoin, and certain US stock themes

With Election Looming, Wall Street Bets on Trump: Dollar, DJT, Bitcoin to be Biggest Winners?

As the US election enters its final stretch, Wall Street is scrambling to make its last bets. Currently, the market is most heavily focused on bets on US treasuries, the dollar, Bitcoin, and certain US stock themes.

US Treasury Yields Rebound Sharply: Trumps Economic Policies May Trigger "Reflationary Risk"

Shorting US treasuries has been one of the most crowded election trades in recent times. Trump's economic agenda is expected to significantly increase the federal deficit, potentially reigniting "reflationary risk" in the US. Therefore, a Trump victory would theoretically put pressure on US treasuries. As the probability of a Trump win has increased in recent weeks, the 10-year US Treasury yield has climbed rapidly, currently at 4.314%. This represents an increase of about 70bp since its low on September 16th, almost erasing the cumulative decline since June.

Dollar Rebounds Strongly: Tariff Policies May Boost the Dollar

In addition to the inflationary risk from increased fiscal deficits, Trump's aggressive tariff policy agenda could also boost the dollar to some extent. Economists say that significantly raising import tariffs would lead US consumers to reduce their spending on imported goods, pushing the dollar higher. The dollar's trajectory has largely mirrored that of the 10-year US Treasury yield, seeing a strong rally since October. It has rebounded 3.3% since its low on September 27th, currently trading at 103.74.

Bitcoin Receives Boost from Trump's Support: A Stark Contrast to Biden

Compared to Biden's relatively unfavorable stance on the crypto industry, both Trump and Harris have expressed support for crypto assets. Trump has even pledged to make the US the "global crypto capital." Bitcoin has seen wide swings in the past six months. It has risen 27.3% in the past three months and briefly reached a record high last week. However, it has quickly fallen back below $70,000 and is currently trading at $68,800 per coin.

Clean Energy and Bank Stocks Diverge: Policy Expectations Will Dictate the Future

Traders expect that if Trump returns to the White House, he will reverse the Biden administration's tax incentives for clean energy, which would severely impact clean energy stocks. On the other hand, if Harris wins, her stance on increasing corporate taxes and tightening financial regulations could hurt bank stocks. In the past six months, the Nasdaq Bank Index has risen over 15%, while the iShares Global Clean Energy ETF has declined over 3%. In the past month, they have respectively gained and lost about 5%. On Monday, they both saw a reversal in sentiment with the Nasdaq Bank Index falling over 1% and the iShares Global Clean Energy ETF jumping over 2%.

Trump Media & Technology Group (DJT) is a Purebred Trump Concept Stock

Trump Media & Technology Group (DJT), the media and technology company primarily owned by Trump, is considered a "purebred Trump concept stock." It is the most direct option for investors to bet on a Trump win. Analysts say that since DJT has minimal earnings, its stock price is not tied to company fundamentals and can be classified as a meme stock. Last week, driven by retail investor buying, DJT triggered a five-time circuit breaker halt for the day. It has rebounded over 182.6% since its low on September 23rd and has nearly doubled since the beginning of the year. Its current market cap has surpassed that of The New York Times.

As election results near, Wall Street's bets will face their final test. How the market will react and who will emerge as the ultimate winner remains to be seen.