Why Tesla, crypto and prisons are Trump trade winners

Tesla, crypto, and prisons stocks surged due to Trump deregulation policies, favoring innovation, speculative assets, and private prisons.

Financial markets surged in response to Donald Trump’s victory in the US presidential election.

That’s despite intense discussion over how Trump’s tariffs, lower taxes, and mass migrant deportations would effect the world’s largest economy.

A week later, the spike looks to be stabilizing. The three major market indices in the United States finished the day down on Tuesday. After climbing almost 5% since November 4th, the day before the election.

Here are some of the firms that have outperformed as investors try to predict what the next four years may bring.

Table of Contents

Tesla

Tesla shares have risen by almost 35% since November 4th.

The move has put the firm’s market value back beyond $1 trillion for the first time. Since 2022, increasing the fortune of CEO Elon Musk. Who owns around 13% of the business, by more than $50 billion.

Investors are betting that a Trump White House would loosen up on some of the safety agencies’ probes into features like self-driving cars.

The links between Trump and Musk may also help Tesla manage changes in relations between the United States and China, where the business has a large presence.

Although Trump is typically anticipated to limit government support for electric vehicles, such as tax incentives, many believe this might actually assist Tesla. the market leader in the United States, making it difficult for competitors to catch up.

Cryptocurrency

Bitcoin, the most well-known cryptocurrency, surged more than 25% to new all-time highs this week as a result of Trump’s victory, momentarily surpassing $89,000.

The increases indicate that investors are expecting significant changes in the industry, which underwent a crackdown under the Biden administration after authorities warned it was replete with hucksters and scammers.

Trump previously termed cryptocurrency a hoax, but he altered his tune on the campaign trail this year, pledging to make the United States the “crypto capital of the planet”.

He stated that he would establish a strategic bitcoin stockpile and fire Securities and Exchange Commission Chair Gary Gensler, who had generated outrage by pursuing legal action against corporations under existing financial regulations.

Crypto businesses argue that their industry should be subject to new, tailored regulations. That will most likely be determined by Congress, where they may also receive a more favorable hearing this year.

Banks

Shares in several of America’s largest banks have risen by double digits since the day before the election, as investors believe financial institutions would benefit the most from Trump’s pledges of reduced regulation.

Among other problems, he will now have a say in setting forthcoming regulations governing how much cash banks must keep on hand as a financial cushion.

Trump is also anticipated to fire Lina Khan, the current head of the Federal Trade Commission, who is known for her anti-monopoly views and is accused of stifling deal-making, a major industry for banks.

Capital One and Discover, whose merger is being reviewed by authorities, have risen more than 15% since the announcement.

Prison operators

Prisons Since November 4th, shares in the biggest publicly listed prisons corporations, GEO Group and CoreCivic, have risen by around 70%.

The increases highlight the significant opportunity investors perceive for private jail operators as Trump plans to round up and deport millions of migrants.

In 2021, President Joe Biden directed the Justice Department to stop doing business with private prison corporations.

But Trump, who reversed a similar order during his first term, is likely to tweak the policy and drive new business as he seeks assistance to carry out his immigration pledges.

Trump’s first actions as president were to assemble the team in charge of immigration policy, indicating that it will be a top priority.

The dollar

The dollar index has reached its highest level since April, climbing more than 2% in the past week.

It is wonderful news for American visitors traveling overseas, but it sends conflicting signals about the economy.

This is due in part to the dollar’s strong relationship with interest rates, which investors believe will remain higher than originally expected.

It partially reflects statistics from before the election, indicating that the US economy is stronger than previously thought.

However, investors are concerned that lower taxes, reduced immigration, and new trade barriers would keep inflation pressures high, making the US central bank less likely to slash interest rates.

Last week, the Federal Reserve provided scant direction for the next months, stating that it was too early to determine what effect Trump’s plans will have.