Why Tesla, cryptocurrencies and prisons will be the winners of the Trump trade

Financial markets greeted Donald Trump’s victory in the US presidential election with a fierce backlash.

That’s despite considerable debate about how President Trump’s tariffs, tax cuts and mass immigration deportation plans will affect the world’s largest economy.

After a week, the surge finally appears to be slowing down. The three major U.S. stock indexes had risen about 5% since Nov. 4, the day before the election, but ended the day lower on Tuesday.

As investors try to predict what will happen over the next four years, here are some companies that are ahead of the curve.

Tesla stock has risen about 35% since November 4th.

The increase pushed the company’s market capitalization above $1 trillion for the first time since 2022, and added more than $50 billion to the wealth of CEO Elon Musk, who owns about 13% of the company.

This represents a bet by investors that President Trump may ease some of the scrutiny by safety regulators on features such as self-driving cars.

Mr. Trump’s relationship with Mr. Musk could also help Tesla deal with the changing relationship between the United States and China, where it has a large presence.

President Trump is generally expected to cut government support for electric vehicles, such as tax credits, but analysts say this will actually benefit U.S. market leader Tesla and help rivals catch up. He points out that it can be difficult.

The price of Bitcoin, the best-known cryptocurrency, rose more than 25% this week following President Trump’s victory, hitting a new all-time high and at one point exceeding $89,000.

The rally is a sign that investors are expecting big changes in the industry, which faces a crackdown under the Biden administration from regulators who say it is rife with scammers and scammers. Ta.

Trump once called cryptocurrencies a scam, but changed his stance during this year’s election campaign, pledging to make the United States the “crypto capital of the planet.”

He said he would create a strategic Bitcoin reserve and fire Securities and Exchange Commission Chairman Gary Gensler, who sparked outrage by taking legal action against companies under existing financial laws.

Cryptocurrency companies say their sector should be subject to new bespoke rules. That will likely be up to Congress, and a friendlier hearing could be held this year.

Shares in some of the nation’s largest banks have risen by double digits since the day before the election, as investors bet that financial institutions would benefit most directly from President Trump’s promise of deregulation.

Among other issues, he will now have a say in pending rules governing how much cash banks must hold on hand as a financial cushion.

President Trump also fell in love with current Federal Trade Commission Chair Lina Khan, who is known for her anti-monopoly views and has been accused of a callous attitude toward closing deals, an important task for banks. It is expected that it will separate.

Shares of Capital One and Discover, whose merger is being considered by regulators, have risen more than 15% since the results.

Shares of major publicly traded prison companies GEO Group and CoreCivic have risen about 70% since Nov. 4.

The gains show investors see a big opportunity for private prison operators as President Trump vows to round up and deport millions of immigrants.

In 2021, President Joe Biden had ordered the Justice Department to stop doing business with private prison companies.

But Trump, who rescinded a similar order during his first term, is expected to change that policy and promote new business as he seeks help to fulfill immigration promises.

Trump’s first actions as president have focused on assembling a team to handle immigration policy, indicating that it is likely to be a priority.

The dollar index is at its highest since April and rose more than 2% last week.

While that’s good news for American tourists traveling abroad, there are more mixed signs for the economy.

Part of the reason is that the dollar’s strength is closely tied to interest rates, and investors expect interest rates to remain higher than previously expected.

This partially reflects pre-election data that suggests the U.S. economy is stronger than previously thought.

But investors also see the risk that lower taxes, lower immigration and new trade barriers will keep inflationary pressures up, making the U.S. central bank reluctant to cut interest rates.

The Fed last week offered little guidance for the coming months, saying it was too early to tell what impact President Trump’s policies would have.