A Trump 2.0 Playbook

Although foreseen by our US & Geopolitical strategists, a “Red Sweep” now makes the macro environment more volatile. After convening for our BCA Live & Unfiltered meeting, we offer three main takeaways.

First, 2024 is not 2016. To begin with, a Trump victory is less of a surprise. Moreover, the macro context differs. The 2016 economy was the result of a tepid recovery, while the 2024 economy is cooling down from a period of overheating. The world needed reflation back then, but not now. Markets are more sensitive to any hint of stimulus, as seen recently in the UK bond market.

Second, the Trump victory and market reaction strengthens our recession case. Higher bond yields tighten financial conditions for an already cooling labor market and a global manufacturing recession. Trade tensions will only weaken global growth.

Finally, we put together a playbook for what a Trump 2.0 presidency will look like across asset classes. While the short-term mood is to go long risk, we recommend positioning for incoming global headwinds.