Prof G Markets: Winners and Losers Under Trump’s Second Term Vox Media Podcast Network | Release Date: November 11, 2024
Overview
In this episode of Prof G Markets, hosts Scott Galloway and Ed Elson delve into the anticipated impacts of Donald Trump’s second term on various sectors of the capital markets. Through a comprehensive analysis of market reactions, policy changes, and economic strategies, they identify key winners and losers poised to influence financial landscapes in the coming years.
Weekly Market Vitals
Ed Elson kicks off the discussion with a snapshot of recent market movements:
- S&P 500: Climbed significantly.
- Dollar: Strengthened against major currencies.
- Bitcoin: Reached a new all-time high.
- 10-Year Treasury Yields: Experienced a notable spike.
Key Headlines:
- Boeing Strike Resolution: Workers accepted a 43% compounded raise over four years without pension restorations.
- Perplexity and NYT Tensions: Amid a Tech Guild strike, Perplexity’s CEO offered technical support to the New York Times, following the Times' demands to halt AI training using its content.
- Palantir’s Strong Performance: The data analytics firm saw its shares rise by 23% after surpassing earnings expectations and securing a $100 million military contract.
Winners Under Trump’s Second Term
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US Stock Market
- Performance: The S&P 500 and Dow Jones Industrial Average surged in anticipation of corporate tax cuts—from 21% to 15%—expected to boost corporate earnings.
- Notable Quote:
- Scott Galloway [02:05]: “The S&P 500 surged, so did the Dow. This is all in broad expectation of corporate tax cuts.”
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Tesla
- Growth: Shares rose by 14% post-election, driven by expected favorable policies and protection against Chinese competitors like BYD.
- Strategic Advantage: Potential fast-tracking of autonomous driving regulations under Elon Musk’s advisory role.
- Notable Quote:
- Scott Galloway [18:53]: “The market is signaling that Tesla is about to become a recipient on the good end of a kleptocrat here known as the Trump administration.”
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Bank Stocks
- Rise: Major banks like JP Morgan, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley saw their shares soar by up to 13%.
- Reason: Expectations of deregulation leading to increased mergers and acquisitions, thereby boosting investment banking revenues.
- Notable Quote:
- Scott Galloway [24:37]: “Less regulation means banks can make more loans with less scrutiny and increase their revenues through higher spreads.”
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Small Cap Stocks
- Performance: The Russell 2000 index climbed by 6%, reaching a three-year high.
- Drivers: Domestic focus of small-cap companies benefiting from Trump’s isolationist policies and reduced global competition.
- Notable Quote:
- Scott Galloway [27:05]: “Small cap companies tend to get the disproportionate, if not all, of their revenue domestically. They’re less hurt by tariffs.”
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Cryptocurrencies
- Bitcoin: Hit a record high amid expectations of lenient regulatory approaches under Trump.
- Market Sentiment: Anticipation of significant capital influx and venture investments into blockchain and crypto sectors.
- Notable Quote:
- Scott Galloway [28:23]: “You’re just going to see Bitcoin go up substantially and venture capital firms start deploying capital against blockchain and crypto companies.”
Losers Under Trump’s Second Term
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Clean Energy Stocks
- Decline: Solar and wind energy stocks plummeted as Trump aimed to halt renewable energy projects and exit the Paris Climate Agreement.
- Market Reaction: Fossil fuel companies like ExxonMobil and natural gas firms like EQT and Antero saw their stocks rise, benefiting from reduced competition.
- Notable Quote:
- Scott Galloway [35:51]: “Anything associated with estrogen, anything that’s seen as feminine in its energy quality... Oh, those. You pussy ass bitch. I'm not interested in wind and solar.”
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Companies Exposed to New Tariff Policies
- Impact: Firms with heavy reliance on importing goods, such as Williams Sonoma, Best Buy, Nike, and international companies like BMW and Volkswagen, faced stock declines.
- Challenges: Increased costs due to higher tariffs make goods more expensive, impacting profitability and consumer prices.
- Notable Quote:
- Scott Galloway [40:03]: “American companies have less competition, take advantage of that and increase their prices, thereby raising prices and creating inflation on American consumers.”
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Housing Market and Real Estate Stocks
- Downturn: Real estate brokers (Redfin, Zillow, Compass), services companies (CBRE, Cushman & Wakefield), and homebuilders (Dr. Horton, Lennar) all saw declines.
- Reasoning: Rising mortgage rates and construction costs due to increased tariffs and tighter labor markets anticipated under Trump's policies.
- Notable Quote:
- Scott Galloway [47:26]: “His fiscal policy could be inflationary. The credit markets predict interest rates are going to go up, making housing even more unaffordable.”
Final Thoughts & Predictions
Scott Galloway provides a critical analysis of the broader economic implications:
- Wealth Transfer Concerns: Anticipates a shift of wealth from younger generations to older ones, exacerbated by deficit funding and rising interest rates.
- Regulatory Scrutiny: Predicts diminished regulatory oversight under Trump, benefiting banks and large corporations but potentially increasing systemic risks.
- Market Volatility: Advises caution, noting that the market may be overreacting to both positive and negative stimuli, presenting potential buying opportunities in undervalued stocks.
Notable Quote:
- Scott Galloway [50:29]: “Nothing's ever as good or as bad as it seems. I think the stocks that have been hammered the most are probably buying opportunities.”
Ed Elson and Scott Galloway conclude with a look ahead, highlighting upcoming economic indicators and earnings reports from major companies like Disney, Alibaba, and Home Depot. Galloway also speculates on Intel’s future, suggesting a potential acquisition or privatization within the next six months.
Conclusion
This episode of Prof G Markets offers a nuanced exploration of the financial ramifications of a second Trump term. By dissecting market reactions and policy expectations, Galloway and Elson provide listeners with a detailed understanding of which sectors stand to gain or lose, equipping them with the insights needed to navigate the evolving capitalist landscape.
Notable Quotes Summary
- Scott Galloway [07:13]: “It's a real raise that's going to be hopefully much faster than inflation. So their purchasing power will go up.”
- Ed Elson [05:00]: “Perplexity CEO Aravind Srinivas has offered to provide technical infrastructure support to the New York Times amid Tech Guild strike.”
- Scott Galloway [18:53]: “The market is signaling that Tesla is about to become a recipient on the good end of a kleptocrat here known as the Trump administration.”
- Scott Galloway [35:51]: “Anything associated with estrogen, anything that’s seen as feminine in its energy quality... Oh, those. You pussy ass bitch. I'm not interested in wind and solar.”
Produced by Claire Miller, engineered by Benjamin Spencer, with contributions from Alison Weiss, Mia Silverio, Jessica Lang, Drew Burrows, and Catherine Dillon.