Billionaire investor Scott Bessent expects the stock market to continue rising every time former President Donald Trump leads Democratic President Joe Biden in general election polls. Bessent predicts that if Trump defeats Biden in November, there will be a huge, long-term market boom.
Bessent and executives at top investment firm Key Square Capital Management LLC wrote in an 18-page memo to investors sent Wednesday that investors expect Trump to defeat Biden. He described what he called a “Trump rally” underway in the market. in November of this year.
The memo, obtained by Breitbart News and first revealed by Bloomberg, said: “The stock market is in the midst of a ‘Trump rally,’ and as long as Biden is ahead of him in the polls, I believe it will continue.” read:
KeySquare’s opinion also argues that both political and market analysts are wrong in their assessment of Trump’s second term. If elected this November, he will likely seek rejuvenation/redemption rather than revenge. The second term is expected to adopt Calvin Coolidge’s Roaring Twenties policies rather than Herbert Hoover’s achievements.
Read the note here:
Key Square January 2024 Letter by Breitbart News On Scribd
Trump himself has been talking about this very phenomenon in recent months. In fact, in an interview with Breitbart News at Mar-a-Lago in late December, Trump said that if Biden wins in November, he predicts a recession similar to the Great Depression of 1929. But he also said that polls showing him leading Biden were causing the stock market to slump. It will soar as investors look to Biden to return to the White House to undo the damage and clean up his mess.
“If I don’t win, we’re going to have a Great Depression like 1929,” Trump told Breitbart News at the time. “I think the stock market is going up because if you look at the polls, people say I’m going to win. Biden is lucky in that regard. We’ve had a phenomenal stock market. . Everything was fine with our economy. There was no inflation.”
Mr. Bessent is a very well-known investor on Wall Street and was previously the chief investor at Soros Fund Management, the investment firm of left-wing billionaire George Soros. Bessent and Soros had a bad breakup a few years ago because Bessent is not left-wing like Soros and is much more aligned with Trump, as evidenced by this memo.
The memo continues on page two, noting that data shows the market performs better whenever Mr. Trump leads Mr. Biden.
“Former President Donald Trump is most likely to become the Republican presidential nominee within the next three to eight weeks,” Bessent’s memo said.
We strongly believe that a major driver of the recent stock market rally is President Biden’s commanding lead in early polling both nationally and in key battleground states. ing. Liquid asset markets are priced based on future probabilities, such as earnings forecasts, interest rate curves, and commodity futures prices, and in our view, the market is currently pricing the odds of a Trump victory on November 5, 2024. I believe that policies that are gender-friendly and market-friendly are firmly established.
Billionaire investor Scott Bessent supports Trump with data…His chart shows stock prices rise 35.2% when Trump leads Biden, compared to a Biden lead. It has been shown that if the company is in the lead, it will increase by 3.4%. pic.twitter.com/akcOp3WsDi
— Phil Kerpen (@kerpen) February 1, 2024
Additionally, the memo explains three factors as to why markets are reacting so strongly to Trump’s possible return to the White House. First, Trump’s return will lead to “an expanded market-friendly economic, tax, and regulatory environment.”
Second, and perhaps most interesting, Trump’s threat to defeat Biden appears to have steered the Biden administration away from more radical policies in recent days.
“Second is policymakers’ reaction to President Trump’s lead,” the memo said.
We believe that a positive self-reinforcing cycle is forming for the time being. As President Trump continues to lead, the Biden administration, led by Treasury Secretary Janet Yellen, is implementing policies to keep the economy vibrant, provide ample liquidity, keep interest rates in check and avoid another Silicon Valley-style explosion. is expected to continue and possibly accelerate. Bank. All are very positive about the stock market. The graph below shows that even though the Federal Reserve is raising interest rates and shrinking balance sheets through quantitative tightening, bank reserves began to increase in early 2023, as seen in the graph below. is shown.
Third, the memo notes that President Trump’s return to the White House will reflect many of the policies seen in 2017 and 2018, not his first two years in office, as Key Square points out. The company explains that this is the belief of management team member Bessent and others. Since then, his administration has been in turmoil as it navigated two impeachments, the coronavirus pandemic and the fallout from a controversial 2020 election.
“Third and finally, we have a highly differentiated view of what a second term for Trump will look like,” the memo said. “We believe that predictions about how another administration will operate are off the mark. Our analysis shows that this period is more likely than the more turbulent 2019-20 I think his 2017-18 presidential years are much more similar, more like Calvin Coolidge than Herbert Hoover.”
The next page of the memo lays out a scenario in which Trump returns to the White House, reflects on the impact of his 2016 victory and refers to Trump as “Mr. Trump.” Friends of the market at 1600 o’clock:
From the night of Trump’s first victory on November 8, 2016 to the early morning hours of November 9, U.S. stocks plummeted, and trading restrictions on futures were lifted at circuit breaker levels. The initial shock of Hillary Clinton’s defeat (most political analysts predicted a +95 percent chance of her victory) shocked capital markets. Secretary Clinton’s refusal to appear in court and concede on election night also raised fears of a violent recount like the 2000 Bush-Gore vote.
As market participants rushed to test President Trump’s stimulus plan and Clinton delivered a belated concession speech on Nov. 9, stocks rallied strongly and lasted for weeks. The upward bias in US stocks continued into the third quarter of 2018.
Markets are now focused on whether the Trump tax cuts, which are set to expire in 2025, will be extended or made permanent. Biden’s White House economic team has already called for higher taxes on corporations and high-income Americans, throwing cold water on reinstating most Trump-era tax cuts. Again, market participants initially tend to extrapolate past events, and in our opinion, this simplistic view of a Trump victory is the focus of investors at the moment. ”
Second, the note said investors expect Mr. Biden to try to play it cool when it comes to the economic fallout, as he is anxious to win re-election. But assuming Trump pulls it off — and many economic leaders around the world say Trump’s second term will see him behaving like an “authoritarian,” as the radical left laughs. They have warned that harsh economic policies could be imposed amid false claims – Bess and his team are predicting an environment of economic boom. A new golden age is dawning in America.
“Our basic scenario is that a re-elected Donald Trump would want to create an economic Lollapalooza and perhaps plan for what he would call ‘the greatest four years in American history.’ says the memo. Economist Ed Yardeni believes that post-COVID-19 America could experience an economic boom similar to the Roaring Twenties a century ago. We believe that the returning President Trump wants this to be his legacy. ”
