Daily Musings

Evening all

election results are pretty clear. A historic comeback. I refrain from voicing my opinion on the presidential candidates. But one thing remains certain: I am once again confided in my inability to gamble. I would certainly not have placed money on a landslide GOP victory. As I am preparing for a wave of memes to emerge, I share my musings.

Cheers
Philip

Today’s Stories

Trump Trade 2.0 – Anamusing Market Musings

Dollar Surge and Bond Market Repricing

• USD Power Move: The greenback spiked 1.6% in a day against major currency baskets. Trump trades are back—markets expect deregulation, tax cuts, rate cuts, and trade tariffs. On a positive EU note: A widening rate differential between EU and US markets should strengthen the case of EU assets to US investors and importers. A boost for European export economies. Perhaps.

• Bond Dumping: Investors rush into equities combined with a clear inflationary view of the second Trump term. 30-year yields soared to 4.67%. The biggest jump in two years. Yields are up 70bps since the September 18 jumbo cut so far.

Sector Shenanigans + Investment Implications

Winners of Trumponomics

• Financial Services: Expected deregulation could benefit banks, boosting lending margins and reducing compliance costs. Bank stocks have rallied, anticipating that Trump’s administration will advocate for a less stringent regulatory framework. This may not only benefit traditional services but could also increase the integration of crypto and alternative financing models. However, while deregulation may spur growth for alternative assets, the associated risk exposure to consumers and the system should not be overlooked

  

• Private Equity: The PE boys and gals across the pond I have spoken to will not admit it. But between the lines I know regulatory roll back and tax cuts are music to their ears. As divi recaps have been the latest in vogue way to return capital to LPs, easing of M&A headwinds may provide the exit markets everyone has been waiting for

• Mortgage Groups: To the MBS and CDO fans out there: Fannie Mae and Freddie Mac rallied as Trump’s potential push for their privatization suggests new profit opportunities for hedge funds betting on an end to government conservatorship. Potential shake up to mortgages and the broader housing finance landscape

• FinTech - a closer look

  • Interest Rates and Strategic US Capital Allocation: Trump is widely expected to push for lower interest rates. Capital more loose should make global assets more attractive to US investors looking to deploy. Trump's deregulatory M&A stance could also facilitate more cross-border M&A, opening up exit opportunities for European FinTech players. Not to mention the baseline appeal of the European FinTech landscape to US strategics: Ample high quality private players tat are trading at discounts to US peers. Highly fragmentated markets with diverse regulatory requirements (i.e. M&A presenting a streamlined approach for market expansion). On a sidenote of US expansion into European FinTech land: Affirm has just begun expanding into Europe (since BREXIT maybe more correctly: the UK)

  • Higher Valuations for FinTech: Lower rates bolster DCF valuations, potentially driving upticks in FinTech valuations. For context: During the 2020-2022 low-rate froth phase, late-stage FinTechs saw valuations increase by around 30%. This trend could continue, particularly with increased US capital flows, making Europe’s FinTech market a prime area for growth-driven investment, particularly in consumer finance and payments

  • Vertical Implications

    • Lending and BNPL: Lower rates could benefit B2C lending platforms in the short term. However, the differentials between the cost of capital and the rates charged (i.e. net interest margin) could squeeze unproven, early-stage firms without enough volume to negotiate favorable terms with capital providers. This makes lending platforms and Buy Now, Pay Later providers vulnerable to margin compression

    • Payments and Consumer Finance: Lower rates are likely to boost consumer spending and borrowing, providing favorable conditions for FinTechs in consumer finance and payment processing. Worth mentioning that a longer view should also include the consideration of Trump’s inflationary implications which could erode US consumer purchasing power over time, impacting demand for credit and payments. Short term I am bullish. Medium term the implications are more complex

    • Cryptocurrency and DeFi: Trump’s previous deregulation policies expanded FinTech activities, especially for riskier novo finance segments—namely crypto and DeFi. This may also imply easier integration of European players with US financials. New avenues for European over sea expansion, though they’d face stiffer competition from well-funded American players

• Oil and Gas: Trump’s pledge to reverse Biden-era climate policies has buoyed fossil fuel sectors, driving companies like ExxonMobil and natural gas producers to new highs. Drill, baby, drill is the motto. This should likely pressure renewables while benefiting traditional energy players. It may also place the US on a collision course with global environmental commitments, potentially isolating the US from international climate coalitions

Losers of the Trump Win

• Renewable Energy Companies: Trump’s opposition to clean energy and pledges to eliminate IRA driven tax incentives and subsidies present a substantial risk for the sector. The global clean energy index fell. European leaders like Ørsted and Vestas particularly hard hit

• Tariff-Sensitive Sectors: Trump’s tariffs could hit European carmakers and shipping companies, affecting both import-dependent industries and supply chains. The proposed steep import tariffs could incite retaliatory tariffs and potentially reduce trade volumes, impacting global logistics and export businesses. Commodities took a hit (copper down 4%), as a tariff-heavy trade policy could throttle global growth. Meanwhile, the CNY weakened sharply — intensifying competition for EU exporters.

• Labour Markets and Skilled Worker Supply

  • Stricter Trump immigration policies could limit the exact high-skill immigration that is pivotal for US tech innovation. For context: 55% of US unicorns have at least one immigrant founder. I would be keen to speak to One Way Ventures—a USD 100m VC fund—that invests solely in immigrant founders. Since 2018, their portfolio has returned a solid 2.5x. 75% of the portfolio still active. The portfolio includes top names like Brex, Chipper, Cash, and KarmaCheck

  • Where the US may lose crucial talent and entrepreneurial spirit in the medium term, Europe could swoop in and provide a vibrant community to them. I hear Paris, Berlin and London are not too shabby.

European Energy Plays

• Energy and Climate: Europe’s green energy projects present a strategic opportunity for US investors seeking stability amid Trump-induced volatility. The EU is on track for between 623-672 GW of solar and 450 GW of wind power by 2030, with the potential to double its renewable share in the energy mix from 17% in 2015 to 34% by 2030. With USD 170bn in infrastructure funding and a growing pool of climate-focused funds, European green assets may be the opportunity for US investors to still deploy the sustainability pegged capital raised where US renewable models are facing tougher cost conditions and constrained economics. If not private asset: 43% of global issuances in green bonds originate in Europe yet another way for US capital to tap their clean investment needs

For European investors, this may serve as a wake-up call: Trump’s victory could disrupt global markets, but strategic adaptation could unlock major opportunities across green energy, FinTech, and industrial innovation in Europe. Bottom line—a high-stakes bet on where US capital will flow.