Investors and execs eye Trump's potential return to the White House
- This post originally appeared in the Insider Today newsletter.
Welcome back! If you've ever wondered why framing something is so expensive, we've got you covered.
Former President Donald Trump dominated the South Carolina GOP primary this weekend. Today, we're looking at what a Trump win in November might mean for the stock market.
What's on deck
Markets: A booming stock market doesn't always equate to a strong economy.
Tech: The hits keep on coming for Elon Musk.
Business: Young people living with their parents are saving money, but it's costing them emotionally.
But first, it's déjà vu.
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The big story
Trump 2.0
The market is facing surprises these days, but one major upcoming event is lacking originality.
The 2024 presidential election seems destined to be the rematch many voters have been expecting: President Joe Biden against former President Donald Trump.
Trump secured a resounding victory in the South Carolina GOP presidential primary against Gov. Nikki Haley. And while Haley has vowed to stay in the race despite losing in her home state, she faces an uphill battle.
However, Biden and Trump's second go-around could have a different outcome. So what would Trump's return to the White House mean for stocks?
The general sentiment is that stocks perform better under Republican presidents thanks to their hands-off approach to the market. (Although, at least one study suggests that's not the case.)
The S&P 500 finished Thursday up 2.11%, notching another record, while the tech-heavy Nasdaq Composite jumped nearly 3%.
The S&P 500 rose more than 60% during Trump's tenure, including weathering the initial shock of the COVID-19 pandemic. Under Biden, the S&P posted a strong 2021 but suffered throughout 2022 due to inflation and rising rates, only to return to record highs more recently.
But at least one economist believes the tax breaks and fiscal expansion that pushed stocks higher under Trump might not be replicable, Business Insider's Matthew Fox writes.
Instead, Trump escalating a trade war with China, including implementing tariffs on US imports, could be what ultimately moves markets, according to Capital Economics' market economist James Reilly. The result could be a drop in US GDP and a hit to corporate profits, he added.
Still, Capital Economics projects stocks would largely be fine and might even excel if Trump won due to the ongoing excitement around AI.
Among the world's more powerful people, opinions are divided on the impact of Trump's return.
Non-American executives have raised concerns about a Trump win, while US executives didn't seem concerned during the World Economic Forum in January, CNBC reported.
The world's most famous banker highlighted Trump's economic record at the conference.
JPMorgan CEO Jamie Dimon said Trump "grew the economy quite well," and his "tax reform worked."
Dimon served on the former president's business advisory council in 2016, but took shots at Trump and the source of his wealth in 2018. Last April, he refused to answer a question about whether a second Trump term would benefit the economy.
Meanwhile, Bridgewater founder Ray Dalio said in January that tensions in the US are so high both candidates pose risks.
"I think they're both threatening for the markets," he said.
Your Monday headline catchup
Mark Zuckerberg rejects personal liability in social media addiction suits.
Pivotal, the flying-car company backed by Google cofounder Larry Page, lays off 10% of staff.
Scientists are designing a supercollider so powerful it could push the boundaries of modern physics.
3 things in markets
1. Just because your stock portfolio is great doesn't mean the economy is. Pumping money into something because you want it to go up versus believing it is fairly valued is a recipe for disaster, according to one economist. The result is less money available to invest in more worthwhile ventures.
2. The Magnificent 7 is breaking up. The members are having very different starts to the year, from Nvidia (good) to Tesla (bad). That's why the originator of the moniker thinks it should be put to bed.
3. Warren Buffett called out stock-market gamblers in his annual letter. "Markets now exhibit far more casino-like behavior than they did when I was young," the Berkshire Hathaway CEO wrote. The legendary investor also honored Charlie Munger, his longtime right-hand man who died in November.
3 things in tech
1. Twitter's former CEO Dick Costolo dishes on the new startup funding frenzy. Costolo now has his own boutique fund, 01 Advisors. He said AI companies are closing deals at a dizzying pace, but the rest of the dealmaking world is now "much more sane."
2. Elon Musk's problems keep piling up. Musk's year isn't off to a hot start: Tesla's valuation has tumbled by about $160 billion, advertisers have abandoned X, and SpaceX is caught in a row between Russia and Ukraine over the company's Starlink satellite internet terminals.
3. AI is having a 1995 moment. In '95, the internet changed the world as it became more widely available. Now, one analyst says artificial intelligence is having a moment of its own — and that Nvidia is leading the charge.
3 things in business
1. Gen Zers are living with their parents to cut costs and save money. Millennials were called lazy for doing the same thing during the Great Recession, but it's seen as smart for Gen Z. However, it might end up costing them more in the long run.
2. Millennials are having fewer kids, and that's not good for the economy. Child-free millennials can still splurge on luxury vacations instead of childcare. But that type of spending won't be enough to offset the economic drag of a shrinking population.
3. Bosses are fighting back. After the pandemic, an influx of job opportunities allowed workers to quit their jobs in search of better opportunities. But now, the pendulum has swung the other way — and some employers are using discreet tactics to cut headcount and avoid public backlash.
In other news
Justice Department calls for dismissal of the Corizon bankruptcy
An abrupt exit at a Goldman Sachs-backed crypto bank raises questions.
The more Americans that take Ozempic, the faster the US economy will grow, Goldman Sachs says.
What's happening today
Today's earnings: Zoom and other companies are reporting.
Amazon.com and Uber will join the S&P Dow Jones Indices.
The US Supreme Court is scheduled to hear cases on social media content moderation.
There will be a court hearing for Binance, which has been charged with securities law violations.
The Insider Today team
Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, editor, in London. George Glover, reporter, in London. Grace Lett, associate editor, in Chicago.