The US elections are very close. The race between Trump and Harris is super heated. If we look at the latest polls and betting sites, Trump seems to be ahead, but of course you never know. Because both betting sites and polls can mislead people. However, on Wednesday, I will examine how Wall Street is pricing stocks, ETFs, assets, bitcoin, and gold that Trump will win, and what clues the market is giving us. Of course, if Harris wins the election, all of these bets will be lost, and completely different bets will win. But I will try to interpret what and how will progress if Trump wins the election, and I will do this within the framework of today's market developments. I don't have a crystal ball, it is impossible for me to predict the outcome of the election. Also, in many cases, asset prices can move very differently than expected.
First, let's look at the general picture. Recently, both polls and betting sites have been saying that the probability of Trump winning has increased. This has already started to be directly reflected in certain stocks. For example, there is GEO Group, which manages private prisons in America, its shares increased by 21% in October. Because it is believed that Trump will return to the idea of private prisons. Also, as you know, Trump's immigration policies are very harsh. It is thought that the population in prisons may increase a little because of this. Another interesting example comes from Bitcoin. As you know, Trump acts like a Bitcoin friend. I am not sure yet, but at least he does so in the elections, we will see the actual results later. In this context, the shares of American Bitcoin miner Riot have increased by around 34%.
If you ask how Trump's policies differ from Harris', it is in customs tariffs. Trump says he will impose very harsh customs tariffs on China and Mexico. In fact, Elon Musk, as you know, postponed building a factory in Mexico for this reason. A relaxation is expected in financial markets and in general in the regulations regulating labor markets. In fact, he will appoint Elon Musk to a position in this regard in order to loosen the regulation and reduce bureaucracy. There may be a bit of a massacre of labor there if Trump wins, and on the other hand, immigration practices. It will be difficult for immigrants to enter. Illegal immigrants in the country will be deported to their countries. This is also likely to put pressure on labor markets. When we look at it economically, if Trump does all these things, it seems quite natural that inflation will increase a little. Because customs tariffs are increasing, the number of workers is decreasing. On the other hand, the power of companies in the country may increase. Because imports abroad will become difficult. Trump's policy basically revolves around this framework.
A section of Wall Street believes that banks will rise if Trump wins. That's why demand for stocks like JP Morgan, Chase, and Bank of America is quite high. The largest ETF in this sector, XLF, is rising. Legendary investor Paul Tudor Jones also stated that he expects an increase in financials, especially in small bank stocks, if Trump is elected. Because you know Trump's attitude towards small banks. There are thousands of regional small banks in America. It is known from the past that he treats them well. In fact, we experienced the difficulties of the easing of regulations at that time during the banking crisis in March 2023. We learned with pain that many of these banks did not show what they should have shown on their balance sheets due to lax regulation and that there were hidden losses.
Of course, there is another company that will rise directly if Trump wins. Trump Media and Technology Group abbreviation DJT increased by 107% in October. The company is not making any money. Its turnover is almost non-existent but it is rising tremendously. I am talking about a company with less than 2 million dollars in revenue. It has currently reached a market value of billions of dollars. If Trump wins, its media presence will increase even more and investors think that Truth Social, this social media platform managed by DJT, will benefit from this interest. I think it is a completely speculative bet. Even Trump himself shares the least amount of posts on Twitter as Truth Social does. Collaboration with Elon Musk is also certain, but this speculation is going well so far. There is a 107% increase only in October.
Economists believe that inflation will increase in America if Trump wins. Therefore, there is a flow into commodities and bitcoin. You already know the rise in gold and silver. Bitcoin has also risen considerably, although not as fast as I expected. Because these are scarce assets. Again, Paul Tudor Jones, whom I mentioned earlier, shares the same view. He says he is currently investing in commodities, gold and bitcoin. Because Trump's policies will definitely affect inflation. Gold comes into play here as a classic protection tool. On the other hand, there is the issue of the Israel-Iran war. They also benefit gold.
Bitcoin has not done as well as I expected so far, but if Trump wins, it is possible for it to go up even more. Because Trump says he supports Bitcoin. And Bitcoin is seen as a hedge against inflation. But I would like to make a small note here. When Trump becomes president, he may change his tone about Bitcoin and gold, which can be serious competitors to the US dollar. You know politicians have such habits. Because after all, the US dollar is already in trouble, you know, there is excessive borrowing. Bond interest rates are very high right now. In other words, the FED lowered interest rates, but bond interest rates are not falling. Because there is a demand shortage. For this reason, I think Trump may go back on this promise. But the market is currently pricing it like this.
There are also stocks that will be beaten if Trump wins. They are already being beaten. For example, Enphase announced its balance sheet on Tuesday and the sharp decline continued. These are clean energy stocks, maybe Tesla is an exception here. Because of Elon Musk's direct relationship with Trump. But there is a decline in these stocks. The two big ETFs in this sector, the Invesco Solar ETF abbreviation TAN and the iShares Clean Energy ETF abbreviation ICLN, both fell by 13% and 8% respectively in October. Of course, if Harris wins, this will reverse. In other words, if you believe that Harris will win or want to make a trade against her, I think it would be wise to play these ETFs. Because these are the ETFs that are currently being beaten. If Trump doesn't win, it would be a smart idea to short the stocks we just mentioned and to long the stocks that are betting on Harris to win. But these are not easy trades in my opinion. But I think that public services will increase no matter which one wins. There is a big ETF on this subject called XLU. Because both of them come with monetary easing policies and especially in the first years of their governments, they want to see an increase in welfare due to the arrival of the citizens.
There are many problems in infrastructure in America. On the infrastructure side, I expect an increase in public services, basically. Therefore, if you invest in XLU, I think that no matter which candidate wins, you will not lose big, even if you do not win big. Of course, I could be wrong, what I am saying is not investment advice. Of course, there is also the money aspect and the exchange rate aspect. Investors like Mark Dowding think that the US dollar will strengthen under the Trump presidency. Because they believe that interest rates will increase and currencies such as the Chinese yuan and the Mexican peso will weaken and they are betting on this. Of course, the new tariffs that Trump will impose on Chinese and Mexican goods will also have a big impact here.
The rise in the US dollar is actually not very good for stocks. Because a very large portion of the companies on the US stock exchange earn a significant portion of their income from abroad. When they bring that money back to America at a high exchange rate, their income will decrease because the exchange rate increases. Again, this is something that the stock market will not like very much, but in the short term, the US dollar is moving high in the stock market. Indeed, the dollar has been rising without taking a breath in recent days. Yes, things are like this, we are entering exciting days.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
