(the armchair trader) - Donald Trump’s former communications director Anthony Scaramucci has given his market predictions ahead of the US election in an exclusive interview with investment platform Saxo.
Although most widely known for falling out with Trump during Scaramucci’s short stint in the White House, he is also recognised in financial circles as the founder of fund of funds Skybridge Capital in 2005 and the highly successful SALT hedge fund conference.
With less than five weeks to go before Americans take to the polls to decide their 47th US President, all eyes are on Donald Trump and Kamala Harris as they ramp up their election campaign. Scaramucci provided Saxo with some of his thoughts.
What is going to happen in the markets the morning after the election? How will they react and who will be the winners and losers?
“So, I think the market will rally on a Harris win and the market will be flat on a Trump win. I think the market knows that with Trump, there comes levels of unpredictability. Remember, in the Biden/Harris administration, we’ve gone to record stock market highs.
“Could Trump be good for business? Yes, perhaps but he’s got the same issue as Harris. She can’t tax unrealized gains and Trump can’t put 100% tariffs on people.
“So we’ve got to make sure that the moderates win as money likes cowardice – Money is a coward. Money likes predictability. Money does not like boldness, but likes predictable and stable situations, money is a coward.”
How do you feel the markets are responding to each candidate?
“Trump polls ahead of Harris on the economy. But, if you ask about individual policies, she pulls ahead of him. His image as a Republican and as a business person is stronger than the actual content of his policies. And so, it’ll be lots of unpredictability and from 35 years of working in the capital markets, the markets don’t like that kind of unpredictability.”
Will the Biden administration’s record on the economy help Harris’s election aim?
“The stock market is at an all-time high. The economy is doing well, if you look at the data that was released last week, it’s very hard to get better data and that in terms of wage growth. Something else very unusual is also going on. You have job growth and wage growth, and you have inflation numbers down.
“Usually, when you get wage growth, you get lots of inflation but those inflation numbers are coming down. The Biden policy initiatives, which include reshoring and manufacturing, such as remaking microprocessors here in the United States are all helping. The infrastructure bill which was embedded in the Inflation Reduction Act, is all of the bridges and road and tunnel restoration has led to higher wages, leading to good economic growth.
“So these are reasons to stay the course because in the last three years, we’ve had rampant inflation. I’m not just talking about five, six, or eight percent inflation, which is the aggregate. I’m talking about certain prices going up as high as 20 to 25 percent. I think that’s created a level of unease in the population. And so the question is, are those numbers coming down in time to help Harris? I don’t think any of us know the answer to that.”
Do you think the hedge fund world is more friendly to Trump versus in 2016?”
“I think that way more of the billionaire class have sided with Trump this time than they did in the two prior elections. I also think there are hedge fund managers that are high profile, like Bill Ackman, that are for Trump now. Other influential people like Elon Musk are for Trump. But I think, in general, most people in the hedge fund community are quietly against him. They don’t like the uncertainty.”
You previously predicted a 75 basis point rate cut from the Federal Reserve by the end of the year. Do you still think it’ll be a 75 point cut?
“Yes, I do. I think they’re going to cut by another 50 points at the next meeting, and then they’ll cut by another 25 basis points before the end of the year. That’s what I expect.
Do you think the US will continue to dominate the global equity market and returns as it has done for the past decade or do you think the next 10 years will be less of a one horse race?
“I don’t see it as a one-horse race per se, I think they’ll be other drivers. I think one of the things we do, any time we project out more than three years, we get so many things wrong. We can’t anticipate certain ecological changes that could affect decision making or policy, so, I don’t know the answer to that.”
By Stuart Fieldhouse
October 15, 2024
