Gold and Dow slid on fading hopes of a Trump 2.0 Trifecta

·         After Biden’s pre-mature exit from the White House race, techs recovered on fading concern of an imminent AI tech restriction on China

·         Unlike ailing & senile Biden, possible new Democratic Presidential Candidate Harris may pose a serious fight to Trump who is still leading in approval rate

·         The US may be heading for a Hung Parliament/Congress and the Trump tax cut may not be continued or deepened after 2025

On Thursday/Friday, Wall Street Futures, Gold stumbled on fading hopes of an early Fed rate cut from Sep’24 after less dovish Fed talks. Also, Trump 2.0 and Trumponomics may not be assured if ‘ailing senile’ Biden is opted out and smarter/younger/experienced Harris is set to fight against Trump. On Sunday, as highly expected Biden opted out of the US Presidential race against Trump and nominated VP Harris as his replacement (subject to final approval from the Democrat party). After Biden’s exit from the US Presidential race against arch-rival Trump, BTCUSD slips (Sunday night trading) as Trump may have to face some serious challenge from Harris, unlike Biden.

There may be some political & policy uncertainty in the US in the coming months (till at least Jan’25, the new/next President wins the White House/Congress/Capitol Hill). Trump even asked Biden to step down immediately from the White House (President Post) as Biden is not fit to run the office in the election campaign:

·         “Who is running our Country right now? It’s not Crooked Joe, he has no idea where he is. If he can’t run for office, he can’t run our Country!!!

·         So, we are forced to spend time and money on fighting Crooked Joe Biden, he polls badly after having a terrible debate and quits the race. Now we have to start all over again. Shouldn’t the Republican Party be reimbursed for fraud in that everybody around Joe, including his doctors and the Fake News Media, knew he was not capable of running for, or being, President?  Just askin’?

·         It’s not over! Tomorrow Crooked Joe Biden’s going to wake up and forget that he dropped out of the race today!

·         My debate with Crooked Joe Biden, the Worst President in the history of the United States, was slated to be broadcast on Fake News ABC, the home of George Slopadopolus, sometime in September. Now that Joe has, not surprisingly, quit the race, I think the Debate, with whomever the Radical Left Democrats choose, should be held on FoxNews, rather than very biased ABC. Thank you! DJT

·         Does anybody believe that Crooked Joe had Covid? No, he wanted to get out ever since June 27th, the night of The Debate, where he was completely obliterated. That was the big moment in Joe Biden’s demise. That was the point in time when Joe was revealed for what he is, an incompetent man who should never have been President. Joe Biden is not fit to serve - He is destroying our Country!

·         Crooked Joe Biden was not fit to run for President, and is certainly not fit to serve - And never was! He only attained the position of President by lies, Fake News, and not leaving his Basement. All those around him, including his Doctor and the Media, knew that he wasn’t capable of being President, and he wasn’t - And now, look what he’s done to our Country, with millions of people coming across our Border, totally unchecked and unvetted, many from prisons, mental institutions, and record numbers of terrorists. We will suffer greatly because of his presidency, but we will remedy the damage he has done very quickly. MAKE AMERICA GREAT AGAIN!”

As of now, VP Harris hasn't officially declared her candidacy for the 2024 presidential election, so there isn't an official election manifesto. However, her political stance can be inferred from her actions and positions as VP and during her time as a senator, which is in line with overall Democratic and Biden’s election/political/economic narrative:

The Democratic Party's platform for the 2024 presidential election is expected to build on key issues that have been central to their agenda in recent years. While specific details may evolve, here are some core policy areas likely to be emphasized:

Key Focus Areas and Policy Positions of Democrats/Harris:

·         Economy and Jobs: Economic Recovery: Continued efforts to recover from the economic impacts of the COVID disruption

·         Infrastructure Investment: Further investments in infrastructure, including roads, bridges, and broadband

·         Investing in infrastructure, including clean energy projects.

·         Supporting small businesses and manufacturing.

·         Raising the federal minimum wage

·         Green Jobs: Promotion of clean energy jobs and technologies to combat climate change and boost the economy

·         Minimum Wage: Efforts to raise the federal minimum wage

·         Healthcare: Affordable Care Act: Strengthening and expanding the Affordable Care Act (ACA)

·         Prescription Drug Prices: Reducing the cost of prescription drugs

·         Public Option: Introducing a public health insurance option to provide more affordable coverage

·         Renewable Energy: Investments in renewable energy sources like wind and solar; Achieving net-zero greenhouse gas emissions by 2050; Investing in renewable energy and green technology Rejoining the Paris Agreement and leading international climate efforts

·         Carbon Emissions: Setting ambitious targets to reduce carbon emissions and achieve net-zero emissions by 2050.

·         Environmental Justice: Addressing environmental inequalities that disproportionately affect marginalized communities

·         Education: Universal Pre-K: Expanding access to universal pre-kindergarten

·         Student Debt: Relief measures for student loan debt

·         Funding for Schools: Increased funding for public schools, particularly in underserved areas

·         Social Justice and Equity: Criminal Justice Reform: Measures to address systemic racism and reform the criminal justice system.

·         Voting Rights: Protecting and expanding voting right

·         LGBTQ+ Rights: Continued support for LGBTQ+ rights and protections

·         Immigration: Pathway to Citizenship: Creating a pathway to citizenship for undocumented immigrants’ Protecting DACA recipients;  Modernizing the immigration system to make it fairer and more efficient

·         Asylum and Refugee Policies: Reforming asylum and refugee policies to be more humane

·         Foreign Policy: Alliances: Strengthening alliances with traditional allies.

·         Democracy Promotion: Promoting democracy and human rights globally

·         China and Russia: Addressing challenges posed by China and Russia through a combination of diplomacy and strategic competition

·         Gun Control: Background Checks: Implementing universal background checks for all gun sales

·         Assault Weapons Ban: Advocating for a ban on assault weapons

·         Enforcing red flag laws to prevent gun violence

·         National Security: Strengthening alliances and partnerships globally; Promoting democracy and human rights; Addressing cybersecurity threats and modernizing the military

·         Healthcare and Reproductive Rights: Protecting and expanding access to reproductive healthcare; Upholding Roe v. Wade and opposing restrictive state laws on abortion

Democrats have generally a center-to-left/sociology ideology. These policy areas reflect the Democratic Party's broader goals of promoting equity, sustainability, and economic prosperity while addressing pressing social and environmental issues. On key economic issues, Democrats are generally fiscal/infra stimulus savvy, not tax cuts or additional tariffs, while Republicans (Trump & Co) generally prefer tax cuts rather than too much emphasis on infra stimulus; Trump also favors higher tariffs.

In the last few weeks, stimulus-addicted Wall Street was boosted by hopes of dual stimulus from early 2025: Fed’s rate cuts (11-QTR rate cuts from Dec’24 to Dec’27); i.e. monetary stimulus and also Trump tax cuts, $2T infra stimulus, and some deregulation moves; i.e. fiscal stimulus. But now after Biden’s exit, it may not be so easy for Trump to win the White House, House and Senate (Trifecta) and the same may be also true for Harris (Democrats). Thus the US may be again heading for a minority Government/President at the White House and it may not be possible for Trump or Harris to implement partisan policies. There may be some political & policy uncertainty even in the first two years until the mid-term election in Nov’25. Thus Wall Street Futures stumbled along with Gold.

Last week, Wall Street Futures soared on hopes & hypes of a dual stimulus boost from early 2025 led by the Fed’s likely rate cuts (eleven) cycle from Dec’24 or even Sep’24 and continuation of Trump’s tax cut policy along with any additional corporate tax cut (from present 21% to 15%). Gold also jumped to a fresh lifetime high of almost 2482 early Tuesday as all these tax cuts may add to the US fiscal deficit & public debt, resulting in more devaluation of LCU (USD) and inflation. Also escalated geopolitical tensions over the Gaza war (Israel-Hezbollah/Iran) have boosted Gold despite some progress on a permanent ceasefire.

In Brief, Trump may be positive for USD/US bond yields and mixed for Equities (higher borrowing costs, China/EU trade tantrum, nationalistic trade policies, and tax cuts), and also positive for Cryptos to some extent; but overall, there may be limited ability for a monumental change in policies by Trump and even Biden due to various checks & balances in the US political & policy system. Trump may not get a trifecta this time unlike his first two years (2016-18). Trump’s policies are seen as inflationary due to attempted tax cuts, tighter immigration, and higher import tariffs (import taxes), but tax cuts and deregulation (if any) are positive.

Overall, tax revenue decreased under Trump (after TJCA-2017), but in the longer term, US tax revenue to normal GDP ratio is around 17%, while the public debt interest/tax revenue ratio increased from around 7% pre-COVID to almost 15% in FY23 (post-COVID) and poised to scale 20% by FY25 due to increasing borrowing and interest rate/bond yield/coupon rate amid elevated inflation. This is a red flag as China and EU’s ratio is around 5.5-6.5%.

All these mean that the US is on an unsustainable path of higher fiscal deficit, higher debt (growing more than normal GFP), higher currency devaluation, higher interest/borrowing cost, and higher inflation. Thus despite USD being the global reserve currency of the world and preferred trade currency, always in demand is getting a boost as a haven/inflation hedge physical/digital asset. Moreover, EM central banks like India/RBI, China/PBOC, etc are actively buying Gold as a part of their strategy to diversify from USD to avoid being trapped in a US/EU sanction for any geopolitical issue (like the Russia-Ukraine war).

Market impact:

On early Monday, Wall Street Futures, Gold slips further on fading hopes of an early Fed rate cut from Sep’24. Also, Trump 2.0 and Trumponomics may not be assured as ‘ailing senile’ Biden has opted out and smarter/younger/experienced Harris is set to fight against Trump. Although, Trump may be still ahead of Harris in the early opinion poll/approval rating, looking ahead Capitol Hill may be heading for a hung situation, where the Ruling President (Trump or Harris) may have no Trifecta in the 1st two years unlike during Trump 1.0 or Biden 1.0.

On Monday, techs/NQ-100 recovered from China's panic low (AI chip/tech restriction) as the present fluid political situation at the White House (after Biden’s exit from the Presidential race) may not result in such real action. But European stocks surged (relief rally) on fading concern of Trump trade tantrum.

Weekly-Technical trading levels: DJ-30, NQ-100, SPX-500 and Gold

Whatever the narrative, technically Dow Future (40500) has to sustain over 40700-40900 for any further rally to 41000/41300-41500/41800 and 41950/42000*-42700 in the coming days; otherwise sustaining below 40650, DJ-30 may again fall to 40400/40200-40000/39900 and further 39800/39600-39400/39200 and 39000/38800-38600/38300 in the coming days.

Similarly, NQ-100 Future (20000) has to sustain over 20200/20600-20800/21050 for a further rally to 21300/21700-21900/22050 and even 23000 levels in the coming days; otherwise, sustaining below 21000/20900-20700/20300 may again fall to 20000/19850-19750/19650* and 19450/19100-18800/18500 and 18400/18100-18000/17700 and 17600/17500-17300/17150 in the coming days.

Technically, SPX-500 (5580), now has to sustain over 5650-5750 for any further rally to 5850/5800-6000/6050 and 6100/6150 in the coming days; otherwise, sustaining below 5700/5600-5575/5550 may again fall to 5500/5450-6375/5350 and 5250/5200-5175/5100 and further 5000/4900*-4850/4825 and 4745/4670-4595/4400* in the coming days.

Also, technically Gold (XAU/USD: 2410) has to sustain over 2435 for a further rally to 2455*/2475-2500*/2525 and 2550/2575-2600/2650 in the coming days; otherwise sustaining below 2425/2390-2375/2355, may further fall to 2320/2300-2290/2275* in the coming days.