Before Dealing with Trump 2.0: If we look at what happened in the investment world during Trump's first term as president.

One of the important factors that will affect the investment world this year is, of course, the US presidential election that will be held next November. But perhaps most investors did not expect the impact on every asset to happen so quickly. Because since the debate that took place at the end of June last year, in which President Joe Biden clearly lost to Donald Trump, there has been a continuation of the case where someone tried to assassinate Donald Trump but failed on July 13. As a result, Donald Trump's chances of winning the election and returning to it have diminished. The number of candidates for a second term for the US president is increasing, and the investment world has begun to adjust to the results of the upcoming elections.

If we are to speculate on which assets will benefit from Trump’s return to office as US president for another term, it would be helpful to look back and examine the events that occurred during Trump’s first term in office. That should help investors predict what will happen in the future. If Trump wins the election, the past picture will be clearer if we only look at the period when Trump was in office until before the outbreak of the coronavirus (COVID-19) that caused various asset prices to fluctuate in ways that are not normal.

US stocks rose well.

Especially in the technology, finance and energy groups, which have seen a big increase. This is because Trump’s corporate tax cuts have benefited many technology companies with large foreign reserves. Reinvesting that money further, buying back shares and paying additional dividends, is a supportive factor that has helped the S&P 500 rise 62% since Trump’s election until the start of the coronavirus outbreak.

Healthcare stocks are volatile.

Healthcare stocks are prone to volatility. But not all sub-industry categories—biotechnology (Biotech) and pharmaceutical companies—have done well. Companies in other sub-categories, such as health insurance companies, have seen more volatility than other groups. This is due to the impact of health policy debates, such as legislative efforts to reform health insurance policies. Efforts to repeal and replace the Affordable Care Act (ACA)

Bond yields rose

Expectations of increased government budget spending, a chance for the economy to grow higher and the US Federal Reserve’s stance, which tends to tighten monetary policy. As a result, the US 10-year bond yield rose by 140 basis points from 1.85% in November 2016 to 3.25% in November 2018. But after that, until the end of 2018, the US government bond yield rose. It began to decline as the market was concerned about the US economy and the risk of a recession as a result of the effects of tight monetary policy.

Private sector debt instruments

The improved economic outlook has a positive impact on investment in US corporate bonds, especially high-yield debt instruments, as investors become more confident that private companies issuing debt instruments will not have their credit ratings downgraded.

The dollar is getting stronger

The US dollar has strengthened significantly against major currencies due to the trend of higher interest rates and strong economic growth in the United States.

Trump's Impact on Monetary Policy

Under Trump, the Fed raised interest rates due to the strong growth of the US economy. In addition, the improving economy at the time led to concerns about rising inflation as well. This is another factor that makes the US Federal Reserve likely to raise interest rates further to prevent the economy from overheating. At the time, this was the Fed’s most hawkish monetary policy stance since the era of ultra-low interest rates since the 2008 financial crisis.

After the Fed raised interest rates three times, Trump came out to sharply criticize Jerome Powell's performance, however, Trump recently came out in an interview saying that if he wins the election, he will still allow Powell to serve as Fed chairman until his term ends in 2026.

Tensions in international politics around the world

The Trump administration’s erratic foreign policy has created volatility in global investment markets. But under Trump, there have been no wars that have escalated into armed conflicts like the ones the world has been dealing with in recent years. By war, Russia had invaded Ukraine. Israel and Hamas. That happened after the entire Trump era.

But, of course, everything that has happened in the past is no guarantee that it will happen again in the future. But what is almost certain to happen if Trump wins the US presidential election next November is the volatility that comes with implementing different policies that tend to change all the time depending on the style of the Trump administration. This is one of the things that investors will get to prepare for the era of Trump 2.0, where the chance of that happening is almost certain.