Donald Trump's Win Is the Greatest Political Comeback in American History, Says Jefferies

Taking a note of 'The comeback kid' and 'animal spirits', it said the initial reaction of the financial markets to Donald Trump's decisive victory in the electoral college, as well as more surprisingly in the popular vote, is what GREED & fear expected -- the US dollar is up, the stock market is up and the US treasury bond market is down.

The latest victory of Donald Trump in the US presidential election has brought about a positive response from the financial markets, with the dollar, stock market and treasury bond market all performing as expected by GREED & fear, a report by Jefferies.

The dollar is up, thanks to the pro-growth policy agenda of the president-elect, despite the fact that the initial reaction of the financial markets was expected to be bearish for the dollar in the long term, Jefferies noted.

The US stock market also reacted positively, with the short-term expectation of tax cuts and a deregulatory wave boosting animal spirits and equities.

However, the risk for equities lies in the rising bond yields, which the stock market has managed to ignore so far, Jefferies said.

Another negative for equities is the deteriorating liquidity situation at a time when valuations are at historic highs, the report added.

Interestingly, Trump also championed Bitcoin during his campaign, proposing the establishment of an official US Bitcoin strategic reserve, Jefferies said.

According to the report, Trump said he would create a national 'stockpile' of Bitcoin using the Bitcoin the US government currently holds, which was largely seized in law enforcement actions.

"The US government currently holds about 208,000 Bitcoins, or 1 per cent of the total maximum supply of Bitcoin of 21m. This is presumably why Bitcoin rose to an all-time high. GREED & fear will retain the 5 per cent allocation to Bitcoin in the GREED & fear global long-only equity portfolio," the report said.

On the gold front, GREED & fear remained constructive, with the latest data from the World Gold Council showing that central banks were still net buyers of gold in the third quarter, albeit at a slower pace than in previous quarters.

Thus, central banks purchased a net 694 tonnes of gold in the first three quarters of 2024, although the net purchases declined from 305 tonnes in Q1 2024 to 186 tonnes in Q3 2024, the report said.

Finally, Jefferies said it viewed the recent stock market correction as healthy, especially since it impacted the most expensive part of the market, while the relatively inexpensive private sector banks have started to out-perform of late amid expectations of a potential cut in the cash reserve ratio (CRR) by the Reserve Bank of India in coming months.

The above is the detailed content of Donald Trump's Win Is the Greatest Political Comeback in American History, Says Jefferies. For more information, please follow other related articles on the PHP Chinese website!