Harris Popularity and Interest Rate Cuts Bring Double Trouble to 'Trump Trade'

"Trump Trade Is Over"
Dollar Value Stagnates... Theme Stocks and Cryptocurrencies Lose Momentum

In U.S. presidential election polls, Vice President Kamala Harris's popularity has surged, and the Federal Reserve's (Fed) likelihood of cutting interest rates has increased, leading to what foreign media describe as a double blow to the so-called 'Trump trade.'

Bloomberg News reported on the 1st (local time) that after President Joe Biden's withdrawal from the presidential race, the dollar weakened and Bitcoin prices fell, causing stocks benefiting from Trump to show sluggish performance.

Former President Donald Trump [Photo by Yonhap News]

Niraj Seth, Chief Investment Officer (CIO) at BlackRock, said, "We have witnessed the end of the Trump trade," adding, "(The market) will remain volatile until November 5."

The value of the dollar has stagnated as support for Vice President Harris has spread following President Biden's withdrawal from the race. Previously, when former President Donald Trump's victory was expected, a strong dollar outlook dominated due to the impact of tariff pledges.

In the stock market, Trump-themed stocks are also struggling. Trump Media, the parent company of Truth Social, surged more than 50% briefly after an attack incident last month but fell more than 5% compared to the previous trading day. From the trading day before President Biden's decision to forgo re-election on the 19th of last month until today, it has dropped about 22.3%. Prison companies expected to benefit, such as GEO Group and CoreCivic, have also shown a downward trend, falling 15.7% and 6.9%, respectively, from the 19th of last month until today.

Furthermore, cryptocurrencies and crypto-related stocks, which had anticipated a 'cryptocurrency president Trump,' are also weak. According to Coinbase, Bitcoin traded at a high of $67,586 on the 20th of last month, the day before President Biden announced his withdrawal, but since then, it has fluctuated and was trading at $63,778 at around 10:35 PM Eastern Time today. Kyle Doin, Head of Trading at ARCA, explained, "Part of the recent Bitcoin weakness is likely due to Vice President Harris's rising trend in the polls." According to a recent Morning Consult survey, Vice President Harris led former President Trump in 4 out of 7 battleground states.

Bloomberg noted that the market is not only reacting to these election forecasts but also paying attention to the Fed's announcement of a possible rate cut in September. The outlet stated, "Fed Chair Jerome Powell acknowledged the possibility of a rate cut in September," adding, "This has led investors to flock to government bonds and doubt the dollar. It is a signal likely to anger Trump."

Garfield Reynolds of MLIV pointed out, "Investors have learned the lesson not to underestimate how quickly the political landscape can change."