Lisa

@eellaoh99

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2. Closing Thoughts With Trump’s election and Republican control of Congress, we maintain an underweight position in U.S. Treasuries, anticipating fiscal stimulus and tax cuts to drive economic growth. We expect improving financial conditions outside the U.S. in the coming year, making international stocks a key focus for investors as monetary and fiscal policies shift to counter Trump’s tariff strategies. Gold and cryptocurrencies remain top hedges against inflation, providing a secure store of value amidst ongoing economic uncertainty.

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Gold prices fell after Trump’s victory, as the reduction in U.S. political uncertainty diminished haven demand. This triggered a shift from gold to Bitcoin, fueled by expectations of crypto-friendly policies from the incoming administration.

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Investors are overweight in utilities, banks, bonds, and U.S. stocks, while underweight in resources, cash, and staples.

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Investors are rotating out of energy, Japanese equities, consumer discretionary, and telecoms while increasing allocations to banks, cash, and emerging markets (EM), as fiscal and monetary policies are expected to become more supportive in response to Trump’s tariff policies.

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The “Long Magnificent 7” tech stocks remain the most crowded trade (50% of investors), followed by gold and the U.S. dollar.

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Nvidia is now seen as the biggest market event in the coming month

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Inflation is becoming a top concern, with 32% of investors citing it as their biggest worry (up from 26% in October). This reflects concerns over global central bank easing and potential fiscal stimulus, which could reignite inflation, alongside ongoing geopolitical risks (21% of investors view it as a key risk).

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The share of investors expecting a “soft landing” has dropped to 55%, while the “hard landing” probability remains steady at 8%, signaling positive sentiment. Notably, the “no landing” scenario has surged to its highest level since May 2024.

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A net 23% of investors now expect global growth to strengthen over the next year, up from just 10% in the previous survey. Trump chart 4 Source: BofA Global Fund Manager

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Small-caps and cyclical stocks have further upside potential, supported by Trump’s protectionist policies. 35% of investors predict small caps will outperform large caps, marking the most bullish outlook for small caps since February 2021.

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There’s strong momentum for the Nasdaq to outperform, but expectations point to the Russell 2000 (small-cap stocks) leading gains through 2025. Retail enthusiasm is growing as stocks enter their strongest seasonal period.

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The S&P 500 surged to new highs following the 2024 election, fueled by the Republican Party’s tax-cut promises. Exposure to U.S. equities reached its highest level since 2013, with the percentage of fund managers overweighting U.S. stocks nearly tripling to 29%, driven by optimism for stronger economic growth.

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1. Full-Blown Bull Market: Must-See Charts when Trump Wins Post-election, fund managers have turned more bullish, anticipating that tax cuts and deregulation under Trump’s leadership will drive economic growth and corporate profits.

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Title: How investors are reacting to Trump's win? Donald Trump’s return to the presidency has already sent shockwaves through markets, with U.S. stocks and Bitcoin surging after his election victory. As the “Trump trade” takes center stage, his policy mix of tariffs, tax cuts, and deregulation is poised to reshape the global investment landscape. Are these market moves just another boom-bust cycle—or is the U.S.’s first crypto-friendly president paving the way for a new digital asset revolution? Dive into our latest research to uncover how investors position themselves for the Trump era.

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3. Closing Thoughts Under the Trump administration, crypto legislation could soon be approved, marking a shift from regulation by enforcement to a more collaborative approach. Regulatory clarity would act as a tailwind for venture capital investments. We remain confident that the current bullish market sentiment will persist into 2025, fueled by ongoing inflows into Spot Bitcoin ETFs, Trump’s pro-crypto stance, a supportive U.S. Congress, and Fed rate cuts.

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2.2.2. SEC Chair Gary Gensler stepped down In another positive signal for crypto, SEC Chair Gary Gensler announced plans to step down on January 20, coinciding with Trump’s inauguration. Gensler’s tenure was marked by a series of enforcement actions, which the industry expects will diminish under a pro-crypto administration.

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2.2.1. Macro tailwinds Global liquidity reached its cycle low in October 2022 and is now on the rise as most central banks reduce interest rates. In particular, the Fed has already cut rates by 75bps this year and is expected to reduce rates by another 25bps in 2024. This expanding liquidity is a key driver of market strength.

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2.2. MicroStrategy’s Accelerated Bitcoin Purchases MicroStrategy, now a prominent Bitcoin Treasury company, has invested a record $5.4 billion in Bitcoin, marking its third major purchase this month alone.

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2.1. Increased TradFi Demand Since the U.S. election, Bitcoin spot ETFs have seen $8 billion in inflows, bringing total net inflows to $30 billion since their January launch. BlackRock’s IBIT ETF recorded a daily net inflow of nearly $1.1 billion on November 7, highlighting the growing institutional interest reshaped by Trump’s victory.

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2. Unpacking the Surge: A Data-Driven Insight Trump’s Crypto-Backed Agenda: Launch a strategic reserve of Bitcoin. Halt government sales of its $19.2 billion Bitcoin stash. Replace SEC Chair Gary Gensler with a crypto-friendly appointee by January 20, 2025. Establish a Bitcoin-focused advisory council within Trump’s first 100 days to create a crypto-friendly regulatory framework. Promote domestic Bitcoin mining, aiming for U.S.-produced Bitcoin only. Crypto advocates like Elon Musk and Vivek Ramaswamy will lead efforts to streamline crypto policies. With Trump’s pro-crypto administration taking shape and the “red wave” in Congress, regulatory optimism is on the rise, signaling a new era of crypto-friendly policies and potential market-transforming changes.

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