It’s 2016 all over again as “America First” trade sweeps through markets
We need only remember back a mere 2,918 days, shortly past midnight following the 2016 election, to see price action like we’re seeing now. And, as it happens, for the same reasons.
Donald Trump’s victory in the 2024 presidential election is causing a huge divergence in US equity futures compared to foreign stocks, particularly emerging market equities.
Russell 2000 futures, tied to the popular US small-cap index, are up 6.1% as of 7:41 a.m. ET; meanwhile, MSCI Emerging Markets futures are off 1.5%. A lot of the weakness in the latter is linked to US dollar strength, as the Bloomberg Dollar Spot Index is up about 1.6%.
The simple thinking here is that Trump’s policies of lower taxes coupled with tariffs on imported goods are a boon for domestic producers, and negative for foreign firms.
Back in 2016, Neil Dutta, head of US economics at Renaissance Macro Research, wrote, “This is the Trump trade in action. ‘America First.’”
Flash forward eight years later to another email from Dutta: “Financial markets are re-running the 2016 playbook.”
Updated at 7:50 a.m. ET on November 6, 2024.
