DealBook: The winners (and losers) in the Trump 2.0 economy and markets

And now?

In the end, it wasn’t that tight. Donald Trump regained the presidency, beating Vice President Kamala Harris in one of the most expensive elections in US history.

“America has given us an unprecedented and powerful mandate,” Trump told jubilant supporters this morning at his Mar-a-Lago campaign headquarters. Indeed, the strength of Trump’s victory — which won most key voter demographics and helped Republicans retake the Senate — has drastic implications for the American economy and the corporate world both at home and abroad.

Stocks and other asset classes, including cryptocurrencies, are rising on hopes of a more business-friendly Washington. (More on that below.) But Trump’s return also heralds a new class of winners in business, along with potentially transformative changes in tax policy, federal regulation and more.

Here’s what could come next.

Businesses will likely face fewer charges. Much of the rally in a wide range of stocks and cryptocurrencies is driven by the belief that a second Trump administration will ease regulation, especially for energy companies, financial institutions, digital currencies and more.

Expect Trump, with support from Republican control of the Senate and possibly the House, to extend the 2017 tax cuts for corporations and the wealthy that are set to expire next year. Whether Trump will move forward with more expansive initiatives like eliminating taxes on tips and overtime — or even cutting income taxes overall — remains to be seen.

But there are also tricks up its sleeve:

How will Trump deal with the antitrust movement? Many corporate leaders had hoped a Republican White House would reverse the Biden administration’s efforts to ramp up competition policy. But JD Vance, Trump’s running mate, praised Lina Khan, the FTC chairwoman, for her efforts to crack down on tech giants that conservatives have criticized for years. While Khan likely won’t continue into the second Trump administration, his tough stance on technology could persist.

Will Trump give Robert F. Kennedy Jr. real political power? The president-elect said Kennedy, a key supporter who has divisive views on health and food policy, could “let loose” on health care. Trump has already indicated that he would support actions such as removing fluoride from drinking water. Agricultural groups have reportedly lobbied Trump’s team about possible changes to pesticide policies and other agricultural practices.

Companies are already acting cautiously. Trump boasted about hearing more from prominent CEOs such as Alphabet’s Sundar Pichai, Apple’s Tim Cook and Meta’s Mark Zuckerberg. Trump associates interpreted this as corporate leaders trying to please him so as not to become targets of his ire, like John Deere.

While former corporate leaders have publicly opposed Trump’s re-election effort, current CEOs, including normally outspoken ones like Berkshire Hathaway’s Warren Buffett, have remained silent for fear of reprisals against their companies.

The future of the Fed’s political independence is uncertain. Trump has repeatedly said the president should have more say in the central bank’s rate-setting policy, a stance he has hardened after his repeated criticism of Jay Powell, the Fed chairman. It is unclear whether Trump has the legal authority to change the independence from the Fed or fire Powell, but with his return to power, he may try to make that happen.

A top Trump economic adviser, financier Scott Bessent, has already proposed a way to undermine Powell’s authority, effectively appointing a shadow president. (Skeptics have warned that such a move could introduce chaos into the markets.)

Will more trade wars break out? Trump has embraced the idea of ​​expansive tariffs — “tariff,” he recently proclaimed, “is the most beautiful word in the dictionary” — as a way to promote domestic industry and punish allies and rivals. China and Europe are already preparing for the potential consequences.

Will he move on? “Markets appear to assume that campaign rhetoric (specifically around deportations and tariffs) will not fully translate into policy,” wrote Paul Donovan, the chief economist at UBS global wealth management, in a recent note.

Concerns about the nation’s fiscal health may continue. Analysts said Trump’s policies could significantly increase the federal debt. That could make Treasury and bond markets potential regulators about how far the economic moves of a second Trump administration might go.

Meanwhile, BlackRock’s Larry Fink wrote in a Wall Street Journal op-ed that the nation needed at least 3% annual economic growth over the next five years to keep the debt-to-GDP ratio stable.

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The post-election boost

Trump trade is dominating global markets. Investors’ fears about a contested election have been outweighed by bets that Donald Trump’s return to the White House will mean less regulation, lower corporate taxes and a rise in profits.

But the money flows are exposing a new world order of winners and losers. Banking and energy stocks on both sides of the Atlantic are rising in value, while companies associated with the transition to green energy are falling. Fears of a trade war are hitting shipping companies. And investors are selling US bonds.

Today’s winners:

Stock futures are soaring, and the S&P 500 looks set to open at a new record high. Bitcoin was in record territory this morning as cryptocurrency bulls hope a friendlier Trump administration. The dollar is strengthening against global currencies, especially the euro and the Mexican peso, on concerns that they could be on the front lines of an avalanche of tariffs from Trump.

Today’s winners:

• Elon Musk’s Tesla was up nearly 12%, and Trump Media & Technology was up 37% in premarket trading.
• The Russell 2000 index, a favorite among Trump trade bulls, rose more than 5% in premarket trading.
• Bitcoin surpassed $75,000 before retreating. Shares of Coinbase, the cryptocurrency exchange that was one of the biggest corporate donors in this election, have soared. The same happened with shares of Argo Blockchain, a London-listed Bitcoin mining company.

Some losers:

• Shipping giant Maersk fell more than 5%.
• Vestas Wind Systems and RWE, two major European renewable energy companies, fell sharply on concerns that Trump will scale back the Inflation Reduction Act.
• Treasury yields have soared, raising fears that Trump’s economic policies will raise inflation and the dollar, and hurt global growth.

All eyes are on central banks as Fed officials meet today for a two-day rate-setting meeting. A more protectionist economic policy could disrupt exchange rate, inflation and growth dynamics.

The futures market this morning slightly reduced the odds of Fed rate cuts next year, and analysts at Deutsche Bank predict the European Central Bank will accelerate the pace of cuts.

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Musk, government czar?

One of the biggest winners of the presidential campaign is Elon Musk, who spent well over $100 million and turned his X feed into a megaphone for Donald Trump.

Trump praised the billionaire entrepreneur in his victory speech this morning. “A star is born,” he exclaimed.

How far will this star power take him? Trump has repeatedly said that Musk would have significant influence if he wins, with a focus on reducing the federal budget. (The tech mogul joked that this job would be the “Department of Government Efficiency,” and yes, that’s an allusion to a meme.) And Musk’s companies, including SpaceX and Starlink — which already have a variety of government contracts — can benefit from his access to the president, especially as Musk has complained about being tied down by regulations.

But he has some questions:

• Could Musk have a say in policy around electric vehicles, autonomous driving and artificial intelligence? Trump signaled he would remove subsidies for the purchase of electric vehicles, a move that would likely hurt automakers trailing Tesla in the electrification race.
• How would a Trump-Musk alliance influence trade policy with China? Trump is a known hawk on China, calling for tariffs of 60% or more on imports from the country. But China is also key to Tesla’s growth strategy. Could Musk convince Trump not to be so strict? Beijing is probably happy to have someone so dependent on China close to the heart of power.
• What about X? Trump Media & Technology Group, the parent company of Truth Social, is riding high this morning on investors’ hopes that Trump’s victory will strengthen its shaky revenue stream. Could this extra competition be bad news for X, which has seen an exodus of advertisers since Musk bought it?

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https://twitter.com/mcuban/status/1854046994345382034

“Congratulations @realDonaldTrump. You won fair and square. Congratulations also to @elonmusk. #Godspeed”
—
Mark Cuban, the tech entrepreneur who campaigned hard for Vice President Kamala Harris.

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A big night for prediction markets

Proponents of prediction markets such as Polymarket, Kalshi and PredictIt, where punters could bet on the outcome of the election, said they reflected reality faster and better than opinion polls. With Donald Trump’s resounding victory, these claims appear to have come to fruition.

“History was made today”Shayne Coplan, the CEO of Polymarket, wrote in X, stating that “Trump campaign headquarters literally found out they were winning for Polymarket.”

Average odds from five political betting markets — Betfair, Kalshi, Polymarket, PredictIt and Smarkets — showed Trump with odds better than a coin heading into Election Day, according to aggregator site Election Betting Odds. When the polls closed, the chances of a Trump victory soared. (Worth noting: Polls measure how voters plan to vote, while prediction markets track the odds of a candidate winning implied by platform bets.)

Prediction markets began reflecting a likely Trump victory several weeks earlyeven when opinion polls showed the race very close. This is despite questions about the potential manipulation of these markets, notably the emergence of a French trader who, for a time, monopolized the market for the Trump-friendly Polymarket contract.

Others tried to get in on the action. Interactive Brokers and Robinhood have established their own political betting markets in the last month.

Separately, investor interest in the business is growing, with Polymarket working to close a $50 million fundraising round that would value it at $300 million. (It’s already backed by Peter Thiel’s Founders Fund.)

The next big “thing” for the industry: how a federal appeals court will rule on the Commodity Futures Trading Commission’s efforts to block Kalshi from offering bets on U.S. elections.