Four Simple Ideas for Trading a Possible Trump Presidency
So you want to trade Trump?
Citigroup Inc. analysts have some ideas for you.
Citi strategists led by Chief Global Political Analyst Tina Fordham double-down on their argument that markets have yet to fully price in an election win by Donald Trump win. Instead they argue that the chances of Trump becoming president are increasing, raising their odds on such an event to 40 percent from 35 percent just last week.
Investors seeking to profit from this Trump trend might look at the following trades, they say.
1. All hail king dollar
It might be time to make another trip overseas, as Citi reckons the U.S. dollar is set to strengthen if Trump takes the white house. Much has already been made of the Mexican Peso's relationship with the electoral polls in recent weeks and Citi analysts highlight it again. They expect pesos per dollar to fall from 19.68 currently to 20 if Trump wins.
2. Make bond yields great again
Both the 10-year and 30-year U.S. Treasuries will see yields rise if Trump becomes president, the team writes. They expect the 10-year yield to hit 1.75 to 2.00 percent if he's elected, and the 30-year to touch 2.60 to 2.75 percent.
3. Trouble in stocks
Meanwhile, U.S. equities will likely see slight declines if Trump wins, especially companies with more of an international footprint given the potential for a stronger dollar and a reversal of some trade agreements. They predict the S&P 500 to fall roughly 3 percent from current levels in the event that Trump becomes president.
Emerging Market equities will have an even tougher time with a Trump White House. The firm expects the MSCI Emerging Markets Index to fall by almost 10 percent thanks to a stronger greenback and potentially softer trade.
4. About all that gold in Trump buildings...
Simply put, the uncertainty brought about by a Trump win will send investors rushing into the perceived safe haven of the shiny metal, with Citi forecasting gold prices to rise to $1,400 for the first time since 2013.