Why Tesla, crypto and prisons are Trump trade winners

Following Donald Trump’s victory in the 2024 US presidential election, financial markets experienced an immediate surge, reflecting investor optimism about his policies. Despite ongoing debates about how his stance on tariffs, tax cuts, and immigration might impact the US economy, certain sectors have already emerged as clear winners. Notably, companies in the electric vehicle, cryptocurrency, banking, and private prison industries have seen significant gains. Here’s a closer look at how these sectors have benefitted from Trump’s win.

Tesla: A Strong Surge Amid Policy Shifts

Tesla shares have soared by around 35% since the election, pushing the company’s market value back above $1 trillion for the first time since 2022. This surge has significantly increased the wealth of CEO Elon Musk, whose 13% stake in the company is now worth an additional $50 billion. Investors appear to be betting that a Trump administration could alleviate some regulatory pressures on Tesla, particularly from safety investigations into self-driving technologies.

Moreover, the close relationship between Trump and Musk could help Tesla navigate potential shifts in US-China relations, given the company’s significant presence in China. While Trump is expected to reduce government support for electric vehicles, such as tax credits, analysts believe this could benefit Tesla. As the market leader in the US, Tesla might be better positioned to maintain its dominance, making it harder for competitors to catch up.

Cryptocurrency: A Boom for Bitcoin

The cryptocurrency market has also experienced a sharp rally, with Bitcoin prices jumping more than 25% to new all-time highs, briefly surpassing $89,000. This surge is seen as a response to expectations that a Trump administration will usher in more favorable policies for crypto. Under President Joe Biden, crypto faced increased scrutiny, with regulators warning of fraud and market manipulation. However, Trump has shifted his stance, recently stating his intention to make the US the “crypto capital of the planet.”

Trump has promised to create a strategic Bitcoin stockpile and remove Securities and Exchange Commission (SEC) Chairman Gary Gensler, who faced criticism from crypto firms for enforcing strict regulations. By signaling support for a more crypto-friendly regulatory environment, Trump has energized the sector, which is now hoping for new, tailored rules rather than the existing financial laws. If crypto firms can gain a more supportive stance from Congress, this could lead to further gains for the industry.

Banks: Big Gains from Lighter Regulations

The financial sector has also seen strong growth, with shares of major US banks seeing double-digit increases since the election. Investors are betting that Trump’s policies will benefit financial institutions by easing regulatory burdens. One of the key areas is the capital requirements for banks, which determine how much cash they must hold as a financial cushion. Trump’s administration is expected to relax these rules, which could improve bank profitability.

Additionally, Trump’s potential to replace Lina Khan, the head of the Federal Trade Commission (FTC), is viewed positively by banks. Khan’s anti-monopoly stance has slowed merger and acquisition activity, a key business for banks. Shares in banks such as Capital One and Discover have risen by over 15% since the election, signaling optimism about a more business-friendly regulatory environment.

Private Prison Operators: A Boost for GEO Group and CoreCivic

One of the most striking winners from Trump’s victory is the private prison sector. Shares in major prison companies, such as GEO Group and CoreCivic, have skyrocketed by nearly 70% since the election. Investors are betting that Trump’s immigration policies, including his promises to round up and deport millions of migrants, will lead to increased demand for private prison services.

In contrast, President Biden had ordered the Justice Department to stop using private prisons in 2021, citing concerns about the treatment of inmates. However, Trump is expected to reverse this policy, allowing private prison operators to resume contracts with the federal government. With Trump prioritizing immigration as a key issue, these companies could see a surge in business.

The US Dollar: Strengthening Amid Policy Uncertainty

The US dollar has also gained strength, reaching its highest level since April and rising by more than 2% in the past week. While this is good news for American tourists traveling abroad, it is a more mixed signal for the broader economy. The stronger dollar is partly due to expectations that the Federal Reserve might keep interest rates higher than previously anticipated. This reflects investor confidence in the US economy, which appeared stronger than expected before the election.

However, there are concerns that Trump’s economic policies—particularly lower taxes, reduced immigration, and new trade barriers—could put upward pressure on inflation. This could make the Federal Reserve hesitant to lower interest rates, which in turn would keep the dollar strong. Although the Fed has not yet provided guidance on how Trump’s policies will affect monetary policy, the dollar’s strength indicates that investors are closely watching these developments.

Conclusion

As investors assess the implications of a Trump presidency, certain sectors have clearly emerged as beneficiaries. Tesla, cryptocurrency, banks, and private prisons are all seeing substantial gains, driven by the expectation that Trump’s policies will create a more favorable environment for these industries. While the full impact of his administration remains to be seen, these sectors are already positioning themselves for potential growth in the coming years. For now, investors are betting that Trump’s economic agenda will help fuel their success.