Politics have been unfolding over the past few days like we’re in a season finale of Scandal. With an assassination attempt on former President Donald Trump, calls from President Joe Biden’s own party for him to bow out of the race, and a number of prominent Silicon Valley titans starting a Trump super-PAC, investors have had a lot to digest.

And now, many are beginning to forecast what the reality of a second Trump presidency would mean for taxes, trade, and tech policy. While the “Trump trade” helped drive a chipmaker selloff while simultaneously boosting some small caps in domestic markets, the prospect of a November victory for the former president also has serious implications for international investments.

Broadly, Trump’s proposed tariff policy of 10% across the board, which some economists have said would drive up inflation if actually implemented, would hurt already-struggling European stocks.

“We have seen a brutal tech sell-off post Trump comments to the media at the RNC National Convention about stepping up China tariffs and protecting Taiwan from China which catalyzed a Street panic for semis, AI Revolution names, and Big Tech,” wrote Wedbush analyst Dan Ives in a note today. “This is just the appetizer comment heading into Trump's much anticipated keynote speech tonight at the RNC in which we expect to hear more details around Trump's broader strategy when dealing with China, tariffs, and Taiwan,” he added.

While China is the focus of these tariffs, it’s not just the Chinese economy that would take a hit. For instance, ASML, a company based in the Netherlands, sold off yesterday on the report that Biden may ramp up tariffs on US goods sold abroad.

Here are where analysts think the biggest impacts of a “Trump trade” will be across the pond.

• Higher tariffs means slower growth in Europe. “For Europe, the prime concern is tariffs,” wrote Goldman Sachs analyst Sharon Bell in a recent note. “Trump has pledged to impose a 10% tariff on all US imports. Our economists estimate it could take out 1 percentage point from the Euro area and 0.5 percentage points from US GDP.” Bell added that each 1 percentage point drop in sales-weighted GDP results in 10% drop in earnings per share.
• The impact of tariffs would be worse in Germany, due to the German economy’s reliance on industrial activity, while it wouldn’t be as bad for economies like Spain and the UK.
• Companies with high Chinese exposure could feel the pain. “We do see some downside risks to the capex outlook for companies with particularly high exposure to China if Mr. Trump wins the election and his new administration follows through on proposals to sharply raise tariffs on imports from China,” wrote Goldman Sachs Chief Economist Jan Hatzius in a separate note.

How should you prepare your portfolio for the “Trump trade”?

A lot of policy predictions are just that—predictions. And if there’s one thing that we all know for sure, it’s that many campaign promises never actually go into effect.

“There is uncertainty about the election outcome and any policy implementation,” wrote Bell. “We have not adjusted our forecast nor recommendations. That said, several of our recommendations could benefit from a Trump re-election scenario.”

Here are some of the European investments that would rise on a second Trump presidency, according to Goldman Sachs:

• “We are overweight healthcare, telecoms and media publishers,” Bell wrote. “We recently re-initiated a long on Europe Defense.”
• Bell also noted that she’s bullish on European companies exposed to the US, while she’s shorting European companies exposed to China.
• “Defensives such as Utilities, Healthcare or our GRANOLAS tend to be the main (relative) beneficiaries of trade risk rising, whereas Cyclicals - Autos, Industrials and Financials - tend to be negatively correlated to trade uncertainty,” Bell wrote.

“GRANOLAS,” FYI, is Goldman Sachs’ fun acronym for the European companies GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oreal, LVMH, Astrazeneca, SAP, and Sanofi.—LB

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“I'm a major believer that there is a role for bitcoin in portfolios.”

When the head of the world’s biggest hedge fund talks, people listen. And considering that Larry Fink, CEO of BlackRock, has long been a self-proclaimed “proud skeptic” of bitcoin, his sudden reversal is all the more interesting.

In an interview with CNBC, Fink noted that he’s come to see the cryptocurrency as a “legitimate financial instrument,” which is a far cry from calling bitcoin “an index for money laundering” back in 2017.

Crypto bulls are likely pleased to have such a heavy hitter on their side, and Fink’s turnaround comes at a pivotal moment for bitcoin, which has suddenly recuperated from its slump earlier this summer.

🟢 What’s up

• Warner Bros Discovery soared 2.40% on a report from the Financial Times that the company is preparing to break itself up.
• Chuy’s Holdings skyrocketed 47.76% after Darden Restaurants announced it is acquiring the company for $605 million. Shares of Darden Restaurants fell 3.03% on the news.
• D.R. Horton rose 10.01%, though it initially sank after a mixed earnings report, but turned things around by announcing a $4 billion buyback program.
• TSMC rose a mere 0.39% despite beating earnings and revenue expectations last quarter, as the semiconductor selloff continues.
• Cintas popped 5.44% thanks to a strong earnings report, as businesses continue to spend on uniforms no matter what the economic environment may be.

What’s down

• Domino’s Pizza sank 13.42% after it missed earnings expectations last quarter and warned it will open fewer stores for the rest of 2024.
• Beyond Meat tanked 10.32% on a report from the Wall Street Journal that management is in talks to restructure the company’s debt.
• Eli Lilly slid another 6.24% as its selloff continues thanks to news that rival Roche Holdings is on its way to developing a weight-loss pill.
• Nokia dropped 7.05% after posting its worst quarterly sales since 2015. Seems like nobody is buying phones with the shape and durability of a brick any more.

For those of you who have been spared from being immersed in the depths of crypto Twitter, you might be scanning the headlines and wondering what a “spot ethereum ETF” actually is and whether it’s a worthwhile investment opportunity.

Spot ethereum ETFs have already been partially approved by the Securities and Exchange Commission, and the investment vehicles could be hitting the market any day now—so what do you need to know?

First and foremost, so-called “spot” crypto ETFs are actually backed by the cryptocurrency tokens. Futures-based cryptocurrency ETFs, which the SEC already approved in 2021 for bitcoin and last year for ether, give investors exposure to the digital asset through derivative futures contracts.

For those who need a refresher, ether is the second-largest cryptocurrency after bitcoin, the king of crypto, and is the cryptocurrency on the blockchain development platform ethereum (surprise, surprise). Many investors buy ethereum as an asset to store value just like they do with bitcoin, while some also believe in ethereum’s technological use cases.

While bitcoin and ether are both cryptocurrencies that traders can buy on exchanges such as Coinbase, many people have long wanted to invest in these digital assets via an exchange-traded fund (ETF), which would allow them to trade crypto using a safe investment vehicle overseen by regulators. Institutional investors, such as pensions or endowments, can also more easily invest in a crypto ETF compared to purchasing tokens outright. And crypto bulls also hope that having digital assets in ETFs will give financial advisors, who are notoriously hostile to crypto, more reason to recommend the assets to their clients.

Keep reading here to learn what a spot ethereum ETF means for investors. —LB

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• The market is rotating away from growth, making these 20 value stock picks with strong dividends some of the likely winners.
• Three CEOs in eight years is terrible and also kind of impressive, particularly for the largest European bank by assets.
• An inverted treasury yield is supposed to be a harbinger of a recession—so if the yield un-inverts, does that mean it’s time for a rally? Actually, no.
• The European Central Bank kept interest rates unchanged but left the door open to a potential cut in September.
• Weekly jobless claims rose more than expected last week, though economists aren’t worried about the labor market just yet.
• Manufacturing has been in the dumps lately, though a recent Philadelphia Fed reading has brought a shred of hope to the struggling sector.
• Don’t buy the dip: This summer slump ain’t over ‘til it’s over, and according to Goldman Sachs, it’s not over yet.

After a big week of earnings, things will calm down a bit on Friday as the market catches its breath heading into the weekend.

Before the open

• American Express (AXP) has had a strong 2024—perhaps too strong. The stock is approaching all-time highs and has overshot the average Wall Street analyst price target by about 4%, so a selloff could be ahead. Then again, strong revenue growth and lower credit card delinquency rates than its peers could see this stock fly higher than expected. Consensus: $3.25 EPS, $16.61 in revenue.
• Halliburton (HAL) hasn’t reaped the rewards of a strong year for the energy industry. Shares of the fracking giant are roughly flat in 2024 thanks to diminished demand for its services. But Wall Street is unanimously bullish on the stock, with all 14 analysts who cover the company giving it a “buy” rating, and an average price target nearly 18% higher than where shares trade today. Consensus: $0.80 EPS, $5.96 billion in revenue.

Attention readers: We need your help.

If you’ve read this newsletter for the two months it’s been in existence (gosh, time flies), then you’ve probably read our Movers & Groovers section and thought to yourself, “I wish these people could think of more creative ways to describe stock moves.”

You’re not alone—we, too, want to expand our vocabulary beyond “rise” and “fall,” and since we want readers like you to have a hand in shaping this newsletter, we thought it’d be a good idea to open the floor to your submissions for alternative verbs.

So pull out your nearest thesaurus and give us your most flowy, most creative, most verbose ideas for how to replace “rise” and “fall” in our Movers & Groovers section.

Submit your superlative verbs here!