Trump 2.0: Melt-up or Cycle Peak

Record market exuberance still holds, amplified by Trump 2.0 election fever sentiment. However, our strategy playbook, continues to favour a two-stage pattern of “Buy the rumour, fade the fact”, based on historical patterns, likely more pronounced now, by the dual factors of profit-taking from record extremes and a policy stress-test into the US inauguration of January 20th 2025 (Figure 1). Review key insights featured in recent interview themed “The Trump Trade” hosted by Real Vision.

Our Global Model Rotation (GMR) spotlights “a tale of two stories”, marked by a tactical unwind of Trump 2.0 risk proxies, coupled with a predicted inflation resurgence (Figure 2). A review of Trump 2.0 key proxies alerts of S&P500 bull-trap (wave 5) reversal, Bitcoin overbought unwind sub-100k & USD corrective wave. On the flip-side, inflation proxies are accelerating higher, notably US10YR, breakeven spreads and commodity proxies such as Copper & Oil are exhibiting cross-asset relative outperformance. More in-depth analysis[…]