Trump Returns: Who in the Financial Markets Will Cash In on His Comeback?

​The 2024 U.S. presidential election, a globally watched event, has concluded. Donald Trump has made history by securing a sweeping victory in both the popular vote and the Electoral College, becoming the second U.S. president to serve non-consecutive terms since Grover Cleveland in 1893.

Trump's win has not only reshaped the political landscape but also sent financial markets into a frenzied rally. Among the biggest beneficiaries of this newfound volatility are Tesla and its CEO, Elon Musk.

Musk Takes Charge of the Department of Efficiency; Tesla and Dogecoin Soar

Since November 4, Tesla's stock has been on a meteoric rise. Investors are betting on a regulatory environment more favorable to autonomous driving technologies, thanks to Musk's close alignment with Trump during the election. Paradoxically, while Trump is expected to reduce federal support for electric vehicles, this could strengthen Tesla's dominance in the U.S. market.

As a result, Tesla's share price has surged by 35%, pushing its market capitalization back above $1 trillion for the first time since 2022. Musk, who owns a 13% stake in Tesla, has seen his personal wealth skyrocket by nearly $50 billion.

On November 12, Trump announced the formation of the Department of Government Efficiency (DoGE), led by Musk and Ramaswamy. This quasi-judicial body, which Trump can establish unilaterally without congressional approval, has a cheeky acronym that plays off Musk's much-publicized enthusiasm for Dogecoin. Following the announcement, Dogecoin's price soared by 20% overnight.

Bitcoin Hits Record Highs; Prop Trading Poised for Revival

Bitcoin, the leader of the cryptocurrency market, has also rallied in response to Trump's victory. In just one week, its price surged by over 25%, briefly breaking the $89,000 mark—an all-time high. This upward momentum reflects a significant shift in investor sentiment toward the crypto sector.

Under the Biden administration, U.S. regulators had cracked down on the cryptocurrency industry. However, Trump's campaign promises signaled a dramatic policy shift, including a pledge to position the U.S. as the "global capital of cryptocurrency."

The revival may extend beyond cryptocurrencies to other areas like prop trading, which suffered heavily under tightened regulations during the previous administration. Trump's deregulatory stance could breathe new life into this embattled sector. Supporting this view, the SEC chairman, Gary Gensler​, recently hinted at stepping down, further fueling speculation of a lighter regulatory touch ahead.

The "Trump Trade" Effect

One of the key drivers of these market surges is the so-called "Trump Trade" effect. With the Republican Party securing control of both chambers of Congress, Trump's administration is poised to implement pro-growth economic policies without the legislative gridlock that hampered his first term.

However, there are still over two months before Trump's inauguration on Capitol Hill. Until he officially assumes power, the Biden administration's policies remain in place, leaving markets cautious and observant of further developments during the transition.