Client Update - 19th July 2024

Following the dramatic events in the US last Saturday, with Trump surviving an assassination attempt, global attention has swiftly shifted from UK politics to the unfolding situation in the States. This incident will go down in history as the most serious attempt to assassinate a president or presidential candidate since Ronald Reagan was shot in 1981. The attack has raised significant concerns about political violence in a deeply divided US, occurring less than four months before the presidential election. By Sunday evening, addressing the nation from the Oval Office, President Joe Biden condemned the violence, stating there is no place in America for such acts. Despite this, many Republicans have blamed Biden and his party, arguing that his comments portraying Trump as a threat to democracy have created a toxic environment.

Trump, who has been the presumptive Republican nominee for some time, was officially confirmed as the party's candidate for the November election, after securing enough votes at the Republican National Convention (RNC). On Monday, Trump chose Senator J.D. Vance of Ohio to join his ticket as running mate. Selecting a ‘Trump sceptic turned superfan’ with closely aligned values and policies was a bold choice. Traditionally, a White House candidate selects a vice-presidential running mate who can attract new demographics or address their own perceived weaknesses in image or policy. Vance's humble beginnings and military background, as chronicled in his best-selling memoir about rural poverty, could help Trump attract more blue-collar voters in all the swing states. Perhaps more significantly, the anointing of this next generation has also ensured that the future Republican Party will be the Party of Trump.

Polls prior to July 2024 had shown a close contest between Trump and Biden. However, many believe that Trump's defiant response to the attack, raising his right fist for an iconic photo in front of the American Flag, may have unexpectedly delivered him a boost ahead of November. His show of toughness will be judged against concerns over Biden’s age, stamina and mental capacity.  At the time of writing, Trump is now a heavy favourite to take the White House, and financial markets have started to respond.

As the world braces for what is increasingly being termed “Trump 2.0,” the question arises: What will the economic and political landscape look like if, or rather when, Trump returns to office? While currently there is an ongoing debate among investors and economists about the implications of his policies, one key distinction is that Trump (and his administration) are more market-oriented, prioritising economic growth over environmental concerns.

In an exclusive interview with Bloomberg (which we have had an advance copy of, prior to its release next month), Trump addressed several key issues, including inflation, energy, tariffs and electric vehicles (EVs). He criticised Biden for imposing regulations and cancelling drilling projects in Alaska, arguing that these actions increased energy costs and inflation. A major policy priority will be lowering the cost of energy through fossil fuels. He advocated for the use of tariffs to protect American industries and criticised the European Union, Japan, and China for their high tariffs on American goods, arguing that reciprocal tariffs would level the playing field. Regarding EVs, Trump supports their development but argues that a full transition is unrealistic given current infrastructure limitations. He highlighted the high costs and limited range of EVs, as well as the significant weight of electric trucks, which would require costly infrastructure upgrades like reinforced bridges. He also suggested that countries should be less confident in relying on the US for security, which will not be welcome news for Ukraine or Taiwan.

In all aspects, Trump 2.0 is an America first, everyone else last agenda. In many ways, this is a more policy-focused version of the Trump 1.0 from 2016.  What is certain is a Trump presidency will look very different from the last 4 years, and markets will be looking for the winners and losers well ahead of the November result.

While elections bring a lot of noise to markets in the short term, smart investors should always maintain a long-term perspective. The Chetwood investment team remains focused not on the politics of the moment, but on the policies that will affect returns in the future. That is as it should be.

Do have a good weekend.