Wall Street no longer looks confident of Trump’s victory

Photo illustration: Intelligencer; Photo: Getty Images

With more than 24 hours left until the final votes are counted on Election Day, Wall Street is already recording its victories.

In the final days of these elections, which for the first time in a century were refracted through the prism of mass betting markets “The financial industry is behaving more like risk-averse investors rather than being on the floor of Trump’s Taj Mahal.” By Monday chances both for Donald Trump and for Kamala Harris on different betting sites more or less converged after several strong polls and voter turnout results favoring Democrats. Accordingly, some of Trump’s so-called deals also came to naught. bets on private prisons, bitcoin and US stocks walking sideways.

There is no single reason why markets became more anxious and cagey about Monday’s election. Part of this, of course, is an industry-wide bet hedge that will protect investors from Tuesday’s results, whatever they may be. But for traders and hedge fund managers, the election is just one event in a long line of things to worry about. “Most of us invest for years and decades, not days. We should be keeping a close eye on the economy rather than reacting to news headlines,” Callie Cox, chief market strategist at Ritholtz Wealth Management, wrote in a research note Monday.

There are several Trump trades that have fallen over the last week or so. GEO Group, a private prison company that surged after Trump’s 2016 victory, fell 15 percent. The Dow Jones fell more than 200 points on Monday. Bitcoin is more than $5,000 off its recent peak of $73,000. Even US Treasury bonds, which had been shrinking massively in anticipation of Trump’s inflationary economy, rose slightly after last week’s sell-off. Trump Media & Technology Group, the former president’s memestock company, has lost more than a third of its value. Betting odds in all directions only give Trump a slight edge – about 55 to 45 as of Monday afternoon.

Just a few days ago, the wealthy seemed confident that Donald Trump would run away with the election, ushering in a second anti-tax, pro-tariff, overall pro-business Trump economy, this time with the help of a predicted Republican front-runner. dominated Congress and the Supreme Court. What’s happened? At some level, it seems that political predictions had less to do with actual belief in who would end up in the White House and more to do with a short-term strategy for making money based on faith that Trump will win.

Consider Goldman Sachs’ point of view. For most of October, just about everything—stocks, gold, oil, bitcoin—was enjoying a historic rally. By Friday, however, the bank was telling customers it might be time to exercise some caution. “Our core bias is that post-election action is likely to provide opportunities to disappear (rather than something to chase),” the bank’s economists wrote in a note on bonds and interest rates. Translation: Well, it was fun, but now it’s time to sell.

Investors should consider the full calendar. On Thursday, the Federal Reserve is likely to cut interest rates again and also give some hint about how healthy the economy is. Bond investors are likely more concerned about the debt ceiling standoff, which could trigger a new round of gridlock in Washington. “Of course, changes in policy can lead to different outcomes, and elections are a harbinger of changes in policy,” Cox said in her note. “But frankly, the Oval Office does not have as much power over the economy as individuals, businesses and the Fed.”