American business weighs prospect of ‘Trump trade’

Eduardo Munoz/Reuters

“Bitcoin surges after Trump assassination attempt” screamed a rather weird headline yesterday.

It was not that crypto investors were applauding a bid to kill the presidential candidate. Rather the fact that he had survived the attack that made them fill their boots with bitcoin and other digital currencies in what is being called a “Trump trade”.

Donald Trump is viewed as good for crypto assets, having hosted industry executives in his Florida HQ at Mar-a-Lago and been willing to accept campaign donations in cryptocurrencies.

---

---

I doubt this was necessarily the endorsement it seemed at first sight. Trump has not been especially discerning on the source of his campaign funds, and has welcomed captains of every industry to his table – as long as they pay.

But the weekend’s events, and the apparent resilience with which Trump endured them, have shortened the odds on a second presidency for the real estate and TV mogul.

While there is still a very long way to go until November’s polling day, the powerful financial and business actors that play a deciding role in US presidential elections must surely be looking again at backing the Trump bid – especially as Joe Biden falters so publicly.

Some of these converts to the Trump cause – Stephen Schwarzman, co-founder of Blackstone Group, springs to mind – dress up their motives as concern about antisemitism, immigration and foreign policy, but all are attracted equally to the prospect of more tax cuts (as Trump did in his first term), less regulation and public spending cuts.

This is not really a verdict on who would be better for the US economy – Trump or Biden. That debate is still raging, with two leading economists, Robert Rubin and Kenneth Chenault, taking to the columns of The New York Times recently to argue that “a second Trump term would pose enormous risks to our economy”.

The new Trump enthusiasts are rather making a decision based on a rational analysis of self-interest: both for themselves as multi-billionaires and for the huge corporations that they control.

Nonetheless, there are some sectors and asset classes that you would expect to fare well in a second Trump presidency, apart from bitcoin.

Trump has openly courted the energy sector, reportedly seeking a $1 billion donation from oil and gas executives at a Florida fundraiser

Perhaps most obvious – and of key interest to the Arabian Gulf region – are oil and gas.

Trump has openly courted the energy sector in the course of his campaign, reportedly seeking a $1 billion donation from oil and gas executives at a Florida fundraiser at which he promised to reverse many of the “green” energy policies that have been a feature of the Biden administration.

Trump has repeatedly called climate change a “hoax” and is an advocate of an expansionist hydrocarbon fuel policy for the USA.

During his presidency, he repeatedly crossed swords with Opec on energy issues and threatened legislation to curb the oil producers’ cartel.

As a real estate developer himself, Trump could also be expected to enact policies as president that would treat the property sector favourably, relaxing federal planning requirements and giving tax breaks and allowances to developers.

He is in partnership with several regional property companies for projects in the Middle East and elsewhere in the world.

How the financial sector fares under a Trump presidency is a more complicated matter. Markets certainly appreciated his tax-cutting approach the last time around – with equities soaring to all-time highs before the pandemic brought them back to earth – and would be likely to applaud more of the same if he were re-elected.

But, insofar as financial markets reflect the real state of the economy, the rest of his policy platform – trade tariffs, protectionism and moves against the USA’s big immigrant workforce – might work against the interests of American corporations and affect their earnings.

One sector that might – surprisingly – do rather well out of a Trump White House could be the media. Despite his rhetoric against the mainstream media as “fake news”, most of the big established news outlets in the USA did well during his last incumbency as readers logged in to follow the presidents’ latest unpredictable moves.

Whether the benefits in these and other sectors will be great enough to outweigh four more years of Trump volatility on the economic, domestic and international front remains to be seen.

That’s the risk of the “Trump trade”.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He acts as a consultant to the Ministry of Energy of Saudi Arabia and is a media adviser to First Abu Dhabi Bank of the UAE