Is the Trump trade back?
The election polls may be deadlocked. But in the markets, some investors are indicating that they see Donald Trump as increasingly likely to win the White House, a belief that seems to mirror a swing in the prediction markets.
Market observers see the return of the so-called Trump trade, which posits that certain industry sectors and financial assets — think oil drillers and cryptocurrencies — would benefit from the former president bringing in lower taxes and less regulation.
The signs that the Trump trade is gaining steam: Stanley Druckenmiller, the billionaire financier, told Bloomberg yesterday that over the past 12 days, markets appeared “very convinced Trump is going to win.” (It’s worth noting that Druckenmiller said he didn’t plan to vote for either candidate.)
Among the evidence Druckenmiller pointed to:
A rally in bank stocks, which are up 8.5 percent over the past two weeks. (That said, banks have so far reported better-than-expected earnings.)
Shares in Trump Media & Technology Group, the former president’s unprofitable social media company, have soared since late September, adding nearly $2 billion to its market value. But the stock’s volatile trading hasn’t always correlated with polls or prediction markets, and it’s unclear whether the company would draw more advertisers if Trump won. Some companies might flock to the platform to curry political favor; others might stay away.
Bitcoin has risen about 13 percent in the past week. The cryptocurrency world has largely bet on a second Trump administration being friendlier to digital assets, though Vice President Kamala Harris has made appeals to the industry.
Also, the dollar approached a two-and-a-half month high this morning as currency traders appear to be pricing in a Trump victory, betting that his economic policies would drive up inflation, lower the price of bonds and strengthen the dollar. (That said, Trump wants a weak greenback.)
But there are potential pitfalls to betting on Trump. “It is a thing in the financial markets,” Holger Schmieding, the chief economist at Berenberg, a German bank, said of the Trump trade.
He told DealBook: “I don’t agree with it in the long run. Higher tariffs and less immigration would hurt U.S. vitality.”
There is no guarantee the trend will last. Talk of the Trump trade grew on Wall Street after the assassination attempt against the former president in July, but soon faded after President Biden said he wouldn’t seek re-election.
After Harris’s strong debate performance last month, market commentators started talking about a “Harris trade,” in which green tech stocks, among other sectors, rallied.
HERE’S WHAT’S HAPPENING
Global chip stocks rebound on TSMC’s strong results. The Taiwanese chipmaker reported better-than-expected quarterly earnings this morning, and raised its full-year outlook. That was welcome news for investors, who have feared that the artificial intelligence boom could be a bubble in the making. Separately, a Chinese industry group with close ties to the government recommended that Intel products sold in the country be subject to a security review.
Uber is said to have explored buying Expedia. The ride-hailing company spoke to advisers about a potential bid for the travel-booking business as Uber pushes to diversify beyond its core offering, The Financial Times reported. Dara Khosrowshahi, Uber’s C.E.O., previously ran Expedia, and discussions were partly focused on his role in any deal.
McKinsey is reportedly close to agreeing to a roughly $500 million settlement over its role in the opioid crisis. The consultancy is nearing a deal with U.S. prosecutors to resolve criminal and civil litigation for its work to help drug makers bolster sales, according to Bloomberg. A settlement would add to earlier penalties, with McKinsey agreeing in 2021 to pay hundreds of millions to state governments.
The latest in the Harris and Trump efforts to woo key voter groups
With the presidential race still tight, both Donald Trump and Vice President Kamala Harris made another push to reach demographics that could put them on top.
The Harris campaign made a pitch for Republicans, undecideds and Black men. The vice president’s advisers and allies are trying to underline the difference between Harris and Trump. That meant starting the day at a rally in Bucks County, Pa., joined by Republican officials, including former Representative Adam Kinzinger of Illinois.
Later, in a combative interview with Fox News that focused largely on immigration and the border, Harris sought to make a break with President Biden. “My presidency will not be a continuation of Joe Biden’s presidency,” she said.
Separately, a group of more than 50 Black business leaders — including Ken Chenault, the former American Express C.E.O., and Mellody Hobson, the chair of Starbucks — endorsed Harris in a public letter and argued that she would help Black Americans. The move is meant to shore up her support among Black men.
Trump sought to court Hispanic voters by participating in a Univision town hall event with an audience of about 100 voters. (In a recent New York Times/Siena College poll of likely Hispanic voters, a quarter of respondents said they were undecided or persuadable, a higher percentage than likely voters more broadly.) At the event, Trump defended his actions during the Jan. 6, 2021, Capitol attack, and remained vague about his immigration policies, eschewing any mention of his pledge to undertake the largest deportation in U.S. history.
In a separate town hall event focused on women’s issues and hosted by Fox News — part of an effort to address the electoral gender gap — Trump called himself the “father of I.V.F.,” which a spokeswoman later said was “in jest.”
Meanwhile … After news emerged that the venture capitalist Tim Draper, who backed Nikki Haley in the Republican primary, had donated at least $926,000 to the Harris campaign during the third quarter, he wrote on X that he was endorsing both candidates.
The race to power the green transition
Lithium is viewed as one of the minerals key to the green transition, and the metal’s strategic value is driving a flurry of deals. The latest: General Motors increased its investment in a lithium producer days after a big mining acquisition, with demand for the metal set to soar.
G.M. has deepened its ties with Lithium Americas, raising its commitment to the Canadian miner to almost $1 billion, from $625 million. It’s another sign that carmakers are seeking to secure supplies of the materials needed for their electric vehicle strategies.
Lithium Americas controls the Thacker Pass mine in Nevada that could become one of the United States’ biggest lithium producers. G.M. will enter a joint venture to develop the project, which could qualify for a $2.3 billion Department of Energy funding package.
Lithium prices have plunged, but the outlook is strong. Global demand has tripled since 2017, and could grow tenfold by 2050, according to the International Energy Agency. But the lithium price has fallen to a three-year-low as E.V. sales growth has slowed.
A senior U.S. official has also accused China of flooding the market to kill competition; Chinese companies account for about two-thirds of lithium chemical production.
The low price could spur more deal-making. The G.M. investment comes after Rio Tinto agreed to buy Arcadium Lithium for $6.7 billion to create one of the world’s biggest producers.
“It marked the first time a big Western miner made a serious move into the sector, and is long overdue as this is what the West needs to compete with China,” Henry Sanderson, executive editor at Benchmark Mineral intelligence, an E.V. supply chain consulting firm, told DealBook. He expects more deals.
Other big miners are seeing green. In April, BHP made a ultimately unsuccessful bid to buy Anglo American. A deal would have given BHP access to huge copper operations in South America. Copper is used in E.V.s as well as in energy infrastructure and other areas.
In other energy transition news: Amazon signed three agreements to back nuclear-power projects, including one that was also backed by the financier Ken Griffin; and a Goldman Sachs investment arm is said to be in talks with other investors in Northvolt about how to solve a liquidity crisis at the embattled Swedish battery maker.
Stability and shake-ups in bank A.I. rankings
For technology companies, the race to lead artificial intelligence over the past year has been fierce. In banking, it’s been much the same.
The latest rankings of how banks are adopting A.I., compiled by the data start-up Evident Insights, shows more institutions making strides in key areas, including hiring and research. But the banks at the top of the list are largely the same as last year, with a few new entrants.
How Evident ranked the banks: The company rated them in four main areas — talent, innovation, leadership and transparency — using publicly available data. It looked at 50 lenders across North America, Europe, Asia and Australia.
Here are the top 10 banks:
JPMorgan Chase (U.S.)
Capital One (U.S.)
Royal Bank of Canada (Canada)
Wells Fargo (U.S.)
CommBank (Australia)
UBS (Switzerland)
HSBC (Britain)
Citigroup (U.S.)
TD Bank (Canada)
Morgan Stanley (U.S.)
Morgan Stanley made the most notable jump, rising to 10th from 17th. The bank benefited from improvements in innovation, including new initiatives powered by OpenAI in its wealth management division.
Also making a big jump was HSBC, which cracked the top 10 after making large gains in recruitment, research, leadership and transparency in its use of the technology.
The gap between leaders and followers is growing, even as all of the banks in the rankings made improvements. “While scores are concentrating and moving forward, banks at the latter end of the index are struggling to keep up,” Alexandra Mousavizadeh, Evident’s co-founder and co-C.E.O., told DealBook.
The top three banks in this year’s survey all had the advantage of devoting resources early on to A.I. — and have been spending and innovating more than everyone else, Annabel Ayles, Evident’s other co-founder and co-C.E.O., added.
A big question is how much the A.I. pushes will pay off. Public investors have been wary of how much tech companies have spent on A.I. For all of the time and resources that banks have poured into their own efforts, the effectiveness of their approaches isn’t yet quite clear: “The R.O.I. is going to take a little bit of time” to become measurable, Mousavizadeh said.
Evident will try to measure that by introducing a benchmark that tracks what institutions are spending and what sort of returns they are seeing (on an anonymous basis, so banks will feel more comfortable sharing sensitive information).
THE SPEED READ
Deals
Leaders of Alimentation Couche-Tard, the Canadian convenience store giant, flew to Tokyo to make their case for a $47 billion bid to buy Seven & i, the Japanese owner of 7-Eleven. (Bloomberg)
The billionaire Tom Gores is said to have agreed to buy 27 percent of the N.F.L.’s Los Angeles Chargers for $750 million. (CNBC)
Elections, politics and policy
Elon Musk’s SpaceX sued California’s coastal commission, arguing that imposed limits on rocket launches by the company were politically motivated. (WSJ)
“Supreme Court Allows E.P.A. to Limit Power Plant Emissions” (NYT)
Best of the rest
Meta is said to have fired about two dozen employees in its Los Angeles offices for repeatedly using $25 meal credits to buy household goods and wine glasses instead. (FT)
“The University of Michigan Doubled Down on D.E.I. What Went Wrong?” (NYT)
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