Wall Street is cranking out Trump-related trades
Shorting NATO, China
There’s a growing cottage industry on Wall Street of trade ideas that may benefit from MAGA momentum.
With the GOP convention underway in Milwaukee, President Biden is trailing in polls for all seven swing states that will likely determine who wins the electoral college. Prediction markets are putting roughly 70% odds on a Trump victory. (For the record, it’s possible that President Joe Biden — or perhaps another candidate — could defeat Trump, though it seems increasingly unlikely.)
Goldman stock analysts are out with a few Europe-related trade ideas this morning that are thematically in step with so-called ‘America First’ positions that Trump is widely expected to adopt if he retakes the White House.
Foremost among those policies is the imposition of new 10% tariffs on all US imports, and perhaps a 60% tariff on Chinese imports, in the hopes of reinvigorating American manufacturing.
That could could do serious damage to the Chinese economy, which is roughly 25% manufacturing.
Among other ideas, Goldman analysts suggested shorting a basket of European stocks that have outsized exposure to the Chinese economy, a group that includes German industrial giants Siemens, Mercedes-Benz, and BMW.
Separately, Goldman’s analysts reiterated a trade idea of buying shares of European weapons makers such Rheinmetall AG, BAE Systems, and Dassault Aviation. That makes sense, both because Trump has pressured European nations to spend more on defense and because European leaders are skeptical about America’s commitment to its military alliance with Europe under a Trump administration. Either way, European weapons makers are likely to be busy.
