Prediction market odds took another turn in favor of Donald Trump in the wake of the July 13 assassination attempt in Pennsylvania.
The high print on PredictIt was $0.69. As the new week dawned, Biden’s betting odds were $0.25 to Trump’s $0.65.
The figure below gives you some visual context for just how dramatic the last several weeks really were. Trump’s a lock, it would appear.
Note that Kamala Harris’s odds overtook Biden’s following the debate — twice.
On the congressional side, the odds of a Republican sweep still stand at around 50% to just 16% for a blue sweep.
I’ve been over (and over and over) the potential policy ramifications of a Trump victory with a Republican congress. See “Brace For Impact,” if you need a refresher.
The short version goes like this: Tariffs, unfunded tax cuts, immigration curbs and possible encroachment on Fed independence. So far, no one’s really trading it, though. Maybe that’ll change now.
“While client election focus has increased, both our conversations and GS Prime Services data suggest minimal trading based on potential election results,” Goldman’s David Kostin said, on the way to enumerating familiar investment themes for a second Trump term. To wit, quoted from Kostin’s latest:
- Enactment of the tariffs proposed by Trump would likely boost stocks with domestic revenues and supply chains relative to internationally-exposed peers.
- In the event of a Republican sweep, revenue raised from tariffs would likely fuel fiscal spending, including potential tax cuts.
- A second Trump presidential term would potentially ease restrictions related to environmental, energy and financial regulation regardless of congressional control.
- Regulatory policy under a Trump administration would likely be a modest positive for big tech [as] antitrust regulation and merger scrutiny [c]ould ease [even as] the DoJ under Trump would [likely] continue with existing antitrust cases against big tech.
Kostin also said small-caps could get a bump from “animal spirits” in the event Trump emerges victorious in November, but he warned that “the path [to] outperformance is a narrow one” given small-caps’ sensitivity to growth.
On the small-cap front, we’re probably late-cycle, and although Fed cuts could trigger a rotation (see the post-CPI trade last week), America’s corporate “have-nots” still face a challenging environment defined by slower growth and high rates.
The bottom line, from Kostin, is that Trump’s policy platform, such as it is, “need[s] more specifics before [it] can be translated into trades.” Ultimately, he said the election outcome isn’t likely to alter “the trajectory of the aggregate US equity market” in a meaningful way.
Kostin did note, somewhat dryly, that the last and only US president to serve two non-consecutive terms — Grover Cleveland — wouldn’t be “an auspicious precedent” for investors. While stocks performed well during Cleveland’s first term, his second term started with the Panic of 1893, a 27% equity drawdown and a depression.
It suddenly occurs to me that Trump has been warned. He won’t have much to gain from continued mouthy rallies. We might see a much different version this time around. He won’t be spending much time overseas or in the press briefing room, I fancy. Besides, for all the attention on Biden’s brain, it won’t be long before we see the other one going down. Reagan did his second term from an easy chair suitable for long naps. I’ll wager the next term will be dominated by Junior and the apprentice.