Speaker 1: The information provided in this program is of a general
Speaker 1: nature and is not intended to be personalized financial advice.
Speaker 1: We encourage you to seek appropriate advice from a qualified
Speaker 1: professional to suit your individual circumstances. The Trump trades have
Speaker 1: all played out, Bitcoin, big tech, and bond yields are
Speaker 1: all surging. As has come back became a reality what
Speaker 1: assets money may flow to next?
Speaker 2: So you know, if we have an equity market that
Speaker 2: could rise by twenty percent within the year, that's pretty significant.
Speaker 1: What do you think, Greg, the lesson should be for
Speaker 1: investors on the prediction market versus the polls? Is the
Speaker 1: lesson always follow the money? Oh?
Speaker 2: It seems to be, doesn't it.
Speaker 1: Major US stock markets, the S and P five hundred
Speaker 1: and Nasdaq have hit new records, marking the best post
Speaker 1: election day in their history. That's on top of the
Speaker 1: lead up to the US election, where the same markets
Speaker 1: had their best pre election performance since nineteen thirty six.
Speaker 1: According to investor Pedia, investors were favoring bank stocks as
Speaker 1: well as the US dollar and gold. As the result
Speaker 1: rolled in, Bitcoin had its biggest moment here we Go,
Speaker 1: having an all time hive seventy five thousand US dollars
Speaker 1: on America's election night, so she couldn't have written a
Speaker 1: better script.
Speaker 3: Having it hit a new all time high on the
Speaker 3: night of the election.
Speaker 1: I think one of the most important things is we
Speaker 1: have the first bitcoin president.
Speaker 2: Hello, bitcoiners, thank you very much. Hello, it's good to
Speaker 2: be with you.
Speaker 1: The frenzy flowed into Black Rocks Bitcoin exchange traded fund,
Speaker 1: taking in one billion US dollars of inflows in the
Speaker 1: first twenty minutes of the market opening post election result.
Speaker 1: On the night, the prediction markets bet the polls with
Speaker 1: billions of dollars in punts price singing a Trump victory
Speaker 1: before it was actually officially announced. Traders executed that accordingly.
Speaker 1: On the bond market, This is how the short term
Speaker 1: two year and long term ten year bond yields responded
Speaker 1: on election night, going vertical, according to JB. Drax on Or.
Speaker 1: That was on top of increases in the weeks leading
Speaker 1: up as trade is priced in risks to inflation from
Speaker 1: Trump's proposed plan, including higher tariffs on imports. Analysis of
Speaker 1: candidate campaign promises suggested Trump would trigger a deepening in
Speaker 1: the US fiscal deficit of around seven point seven trillion
Speaker 1: US dollars.
Speaker 3: Just because the promises has given of significant tax cuts
Speaker 3: are generally estimated to be far larger than the ones
Speaker 3: that Democrats have, and I think we would end up
Speaker 3: in a deficit situation.
Speaker 1: Whether that occurs or is allowed by Congress is yet
Speaker 1: to be seen, but US based economists have their concerns.
Speaker 3: The United States all deficits a little bit like those
Speaker 3: fancy credit cards that'll tell you what the credit limit is.
Speaker 3: There is a credit limit, but the only way to
Speaker 3: find out is a by hitting it, and I think
Speaker 3: that's what has economists concerned.
Speaker 1: Tiger Brokers Chief strategy Officer Greg Bolland has been watching
Speaker 1: all as it's closely before, during, and after the US election.
Speaker 1: Look at Tesla, I mean that was not as high
Speaker 1: as fifteen percent on stage this morning.
Speaker 2: Yeah, well so it's nearly there again.
Speaker 1: So never met against Elona.
Speaker 2: Now, I've never been against Elon is obviously back the
Speaker 2: winning horse here Peces.
Speaker 1: If it's anything like the last Trump presidency, stocks will
Speaker 1: be in for a boost. Great, good to see you,
Speaker 1: Thank you so much for doing this big week.
Speaker 2: Yes, thank you, medicine. Lovely to see you again. And
Speaker 2: he's a huge week this week and a huge weeks
Speaker 2: last week. So last week we had two hundred and
Speaker 2: fifty six of the S and P five hundred stocks report,
Speaker 2: and then this week obviously we've got the election and
Speaker 2: tomorrow morning news on in time the Federal Reserve, it
Speaker 2: probably will well ninety chance of also reducing rates by
Speaker 2: another twenty five basis points.
Speaker 1: Great, mostly between us until the weekend. Then that's when
Speaker 1: we can restore it.
Speaker 2: Yeah, and around them. Walk on to Halp Medison last Saturday,
Speaker 2: just to keep myself in tune.
Speaker 1: Oh that's great. Like, I want to ask you about
Speaker 1: your Trump trades, if you don't mind sharing, how were
Speaker 1: you prepositioned going into this and if you don't mind
Speaker 1: telling us, how have they played out for you?
Speaker 2: My own personal trades mostly been selling puts against stocks
Speaker 2: that I think are going to rise. So with stocks
Speaker 2: like quoll Con they're reporting is tomorrow, the stock prices
Speaker 2: around one sixty yesterday, it's around one seventy today, and
Speaker 2: so I'm happy to buy it at one fifty. So
Speaker 2: if I sell a put, I make some money out
Speaker 2: of that put premium that someone's prepared to pay me.
Speaker 2: That's how I've done it, just by selling productions on
Speaker 2: markets that on stocks that I think are going.
Speaker 1: To go higher. You're always the derivatives guy, I love it.
Speaker 1: Let's talk about all those broad Trump trades that we're
Speaker 1: seeing across markets right now. Equities are certainly up in
Speaker 1: the US across the board significantly, big tech, real winner, banks,
Speaker 1: a big winner Bitcoin, USD. I mean, give me the
Speaker 1: color on how this has played out and how strong
Speaker 1: it is.
Speaker 2: Okay, So the main thing is what the markets want
Speaker 2: is certainty, and this has been a very decisive win
Speaker 2: for Trump and also the Republicans in terms of the
Speaker 2: Senate and also Congress. So it is definitely a move
Speaker 2: in their case the red or to the right towards
Speaker 2: it Republican government. In terms of the Trump trades, as
Speaker 2: you said, there's certain stocks that are done particularly well.
Speaker 2: And if we look at at the markets today, the
Speaker 2: Trump related stocks themselves, like Trump Media, is actually more
Speaker 2: or less flat, although yesterday it was up around fifty
Speaker 2: or sixty percent in the after ours market last night. Today,
Speaker 2: the financials have been the big winner and definitely the
Speaker 2: top two out of the stocks that have gone higher
Speaker 2: is Goldman Sachs and JP Morgan both up. JP Morgan
Speaker 2: up ten and a half percent, and Godman stacks up
Speaker 2: about up a little bit more than that, but also
Speaker 2: the likes of Morgan, Stanley and City and Wells Fargo
Speaker 2: all up between sort of eight and a half and
Speaker 2: twelve and a half percent, so they'll been the biggest
Speaker 2: winner in terms of stocks. And if you look at
Speaker 2: the S and P five hundred out of the top
Speaker 2: twenty gainers, eleven are financials.
Speaker 1: While financial is up so strongly, I'm assuming that that's
Speaker 1: because investors are now taking out the risk of extra regulation, right.
Speaker 2: Yes, extra regulation, tax perhaps and benefiting smaller companies. Companies grow,
Speaker 2: they need to then list or or get more capital,
Speaker 2: so they go to the big banks for that capital.
Speaker 2: And also more certainty abound interest rate it's going forward
Speaker 2: and inflation coming down definitely. The job numbers last week
Speaker 2: were pretty weak. The ICN numbers this week were reasonable,
Speaker 2: So the chances of probability of a rate cut on
Speaker 2: Friday is very high.
Speaker 1: Where do you think equities could go from here? If
Speaker 1: you look at history, how have US equity markets performed
Speaker 1: when there has been such a decisive like this election
Speaker 1: result and also a Republican result.
Speaker 2: Yeah, okay, so in terms of in terms of the
Speaker 2: results so we can we can look at charts in
Speaker 2: terms of returns the day after, the week after, the
Speaker 2: months after, and the year after, if you like. And
Speaker 2: if you look at the last two elections, so that
Speaker 2: Biden election, the day of the election was certain that
Speaker 2: he was the president, the market went up two point
Speaker 2: two percent, and the SMP five hundred wreas previously and
Speaker 2: under trumpet went up one point one percent. And the
Speaker 2: average between nineteen eighty four and now is actually a
Speaker 2: decrease of about zero point five of a percent. So
Speaker 2: the SMP rallying today around two point six percent is
Speaker 2: higher than it's ever done in the last period from nineteen.
Speaker 1: Eighty well, so this is actually rare, and that's considering
Speaker 1: that it was already the best pre election performance since
Speaker 1: like nineteen thirty six heading into this. So this all
Speaker 1: net is pretty incredible for equity.
Speaker 2: Market three and the equity markets will continue to go
Speaker 2: higher in my opinion. And if you look at the
Speaker 2: returns on the SMP five hundred in the year after
Speaker 2: an election, it's around sixteen and a half percent. Under Biden,
Speaker 2: it was around twenty four percent. Trump around twenty four
Speaker 2: percent also, and also Obaman his last term it was
Speaker 2: up around twenty six percent. So you know, if we
Speaker 2: have an equity market that could rise by twenty to
Speaker 2: twenty five percent within the year, that's pretty significant for
Speaker 2: people who wish to invest inequities and significant for New
Speaker 2: Zealanders who have qvserver funds, and a lot of these
Speaker 2: server funds invest in these top tier companies in the US.
Speaker 1: No such thing as an absolute short thing, though, Greg No,
Speaker 1: if we consider the risks. It is proposed that Trump
Speaker 1: would be more inflationary to the US economy through things
Speaker 1: like direct tariffs on imported goods into the US. How
Speaker 1: could slightly higher inflation if that occurs, if we get
Speaker 1: more borrowing and a larger fiscal deficit in the US,
Speaker 1: how could that impact US company earnings?
Speaker 2: Yeah, certainly so in terms of in terms of the
Speaker 2: tariffs and the like. It's definitely something that the market
Speaker 2: may may increase in. Moody's put out a report saying
Speaker 2: that under a Trump government, inflation could go from the
Speaker 2: two and a half percent to three and a half
Speaker 2: percent by the end of twenty twenty five. Under House
Speaker 2: would have maybe stayed the same or even belower. So
Speaker 2: it definitely is cause for worry in terms of inflation,
Speaker 2: prices may go up, but one percent is not too
Speaker 2: high in terms of you know, under the Biden administration,
Speaker 2: it was the third worst term in terms of inflation
Speaker 2: and an average inflation rate for that whole term. It
Speaker 2: was a third worst since the nineteen eighties and.
Speaker 1: The third largest fiscal deficit on record, referred only to
Speaker 1: twenty Queen twenty one, which recovered years, so absolutely excepit.
Speaker 2: What grees are the things that you mentioned in terms
Speaker 2: of physical deficit, there's definitely cause for concern. If Trump
Speaker 2: does doesn't increase or that reduces tax rates or keeps
Speaker 2: tax rates the same, then the income earned for the
Speaker 2: from the federal government is less. So you know that
Speaker 2: both both parties are fiscally irresponsible. There's no doubt about that.
Speaker 1: More inflation could actually be good for a higher fiscal deficit,
Speaker 1: because the US government could just inflate more of that
Speaker 1: dead away, couldn't they correct.
Speaker 2: But also the biggest problem under the Biden administration, the
Speaker 2: differential between inflation and wages and wage growth and inflation
Speaker 2: growth or price growth if you like, was prices were
Speaker 2: three or four times higher than wage growth, and at
Speaker 2: the end, wages were slightly ahead in terms of growth.
Speaker 2: And so if under a Trump administration more jobs are created,
Speaker 2: particularly in smaller companies because of tariffs and protectionism, then
Speaker 2: you know, wage growth should be hopefully above the three
Speaker 2: and a half percent that that inflation is. So you know,
Speaker 2: the whole premise of the Trump trade and the Trump
Speaker 2: election has really been the effect on the economy or
Speaker 2: the Biden administration. And you know, after after COVID, most
Speaker 2: most governments have been elected out, so you know, he
Speaker 2: was there with fiscal easing or least physical policy to
Speaker 2: to help create more jobs and keep the economy going.
Speaker 2: And the same happened in New Zealand, and you know
Speaker 2: we're paying the cost now, but that also caused high inflation.
Speaker 1: We aren't quite seeing the inflation potential expectations on the
Speaker 1: equities market, but it is playing out quite strongly on
Speaker 1: the bond market. Fine yields had been surging, they were
Speaker 1: pretty much vertical on that immediate election result. That means,
Speaker 1: with the inverse relationship, the bond prices are falling. What
Speaker 1: does that mean for fixed income investors that are in
Speaker 1: bonds and US treasuries at the moment and could it
Speaker 1: longer term signal actual better returns in US treasuries certainly.
Speaker 2: So in terms of the ten year tenure end of
Speaker 2: the curve is definitely a lot higher, but interest rates
Speaker 2: coming down at the short end, particularly for drop again
Speaker 2: by another twenty five basis points for the cash rate
Speaker 2: this Friday. There's definitely a steepening of the curve between
Speaker 2: the short term rates and long term rates, and so
Speaker 2: people will either move into shorter term products like the
Speaker 2: treasuries and the like, where the yields may go up
Speaker 2: because they're going to be borrowing more so therefore they
Speaker 2: have to offer more interest and more risk obviously, but
Speaker 2: also you know, people will move out of treasuries, long
Speaker 2: longer term treasure bonds, in long term corporate bonds into
Speaker 2: equities because equity markets are likely to rally from here.
Speaker 1: But coin bitcoin, where does that go from here? All
Speaker 1: time high on election night.
Speaker 2: Yeah, that's right, So I shares black rocks. It has
Speaker 2: the predominant ETF which started at the beginning of the year.
Speaker 2: That was up eight point eight percent overnight. And then
Speaker 2: if you look at the individual Trump trade stocks that
Speaker 2: could benefit from from bitcoin changes, coin Base was up
Speaker 2: thirty two percent this morning and Marason Digital what nineteen percent?
Speaker 2: So significant increases in the in the prices of those
Speaker 2: related to bitcoin and cryptocurrency.
Speaker 1: How do you see a Trump presidency actually changing the
Speaker 1: game for bitcoin investors? Material? Is it?
Speaker 2: Hopefully over time there'll be more regulation of bitcoin. That's
Speaker 2: probably against Trump's thing in terms of regulation, But you know,
Speaker 2: people are investing in these sorts of products need certainty,
Speaker 2: and the likes of an ETF on bitcoin like the
Speaker 2: ib which is offered by Ice Shares and Black Crock
Speaker 2: provides a way or mechanism of investing in these markets
Speaker 2: without having to store the bitcoin or worry about your
Speaker 2: passwords and all that sort of thing. So move movement
Speaker 2: towards some more certainty around the process of clearing and
Speaker 2: settlement and trading and security of the bitcoin will help.
Speaker 2: And and you know, definitely the likes of the ETFs
Speaker 2: helped with that, and that will that may long continue.
Speaker 1: And now under this leadership it will be more help
Speaker 1: than hinder you think.
Speaker 2: Create in district correct, Yes, and definitely he has been
Speaker 2: a big proponent of bitcoin.
Speaker 1: What do you think, greg, the lesson should be for
Speaker 1: investors on the prediction market versus the polls is the
Speaker 1: lesson always follow the money.
Speaker 2: Well it seems to be, doesn't it. So if you
Speaker 2: look at the polls right up till you know, the
Speaker 2: till the boats closed, it was a fifty to fifty game.
Speaker 2: Whereas the the the tipsters and the I could have
Speaker 2: said Trump was going to win for from weeks ago.
Speaker 2: So in the odds of you know, your payout being high,
Speaker 2: Honor trump victory was quite low. So you know, definitely
Speaker 2: follow the money and then that's whether what's happening at
Speaker 2: the moment.
Speaker 1: Thank you so much for your time, Greg, always good
Speaker 1: to chat.
Speaker 2: Thank you, thank you.