The Trump trade is back on as betting markets swing in favor of a win for the former president
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- Betting odds favor Trump winning the November election, with Polymarket odds at 59.5%.
- Trump's odds rebounded from the weakness seen immediately after his debate performance last month.
- The Trump trade is back on, with Trump Media stock, bitcoin, and bank stocks rising.
The Trump trade has been regaining momentum as betting odds rise in favor of the former President winning the election in November.
Betting market websites like Polymarket and Kalshi have swung to Trump's favor significantly since early October.
With nearly $1 billion wagered on the outcome of the Presidential election at Polymarket, Trump shows a 59.5% chance of winning compared to 40.3% for Harris at 12:17 p.m. ET on Wednesday.
The Trump trade in markets weakened after the mid-September debate between Kamala Harris and Trump, as Harris was largely viewed as the winner of their one-and-only meeting.
If you overlay a chart of Trump's odds of winning the election in November with individual components of the Trump trade, it's highly correlated.
Here's what's moving in markets that suggest the Trump trade is back on as investors bet on a victory for the former president.
Trump Media stock
The parent company of Donald Trump's Truth Social has seen its stock price soar 87% since Trump gained a favorable edge in the betting markets on October 4. The stock was up almost 11% on Wednesday, trading at $29.93.
The shares slid in September around the time of the Harris-Trump debate and as investors grew nervous about the expiration of a lock-up period that would allow insiders, including Trump, to sell shares.
Trump has said he would not sell down his nearly 60% stake in the company.
Bitcoin
The price of bitcoin is up 11% since Trump's victory odds began rising in the betting market on October 4. In recent years, Trump's warm embrace of the crypto world has turned bitcoin into a Trump trade.
Bernstein analyst Gautam Chhugani believes bitcoin could surge to $90,000 if Trump wins in November.
"Elections remain hard to call, but if you are long crypto here, you are likely taking a Trump trade," Chhugani said in a note last month.
The dollar
The US dollar has surged so far this month, rising nearly 3% against a basket of other currencies.
Trump's policy proposal of a universal tariff of 20% is seen as inflationary and would likely spark a rise in interest rates, which in turn would likely boost the US dollar.
"Should he re-take the White House in November, the dollar would probably rally sharply, at least in the near term, on expectations of higher US tariffs and interest rates," Capital Economics said in a note last month.
Bank stocks
Trump has promised a wave of deregulation if he's elected as the 47th President of the United States, and one industry that Washington DC heavily regulates is the banks.
Allies of the former president have said he aims to unburden banks from many of the regulations that came into effect following the 2008 financial crisis, something that his first administration had tried to do with mixed success.
A looser regulatory approach more broadly could also ignite a fresh wave of mergers and acquisitions, as a Trump administration would likely be less focused on antitrust than the Biden White House. More M&A could boost big bank revenues and help drive up profits from dealmaking.
The SPDR S&P Bank ETF has surged 9% since October 4, while the SPDR S&P Regional Banking ETF is up about 10%.
It's still a close race
While the betting markets are pointing to a Trump victory in November, the polls still show the race is essentially a dead heat.
And although some areas of the stock market have surged since Trump gained an advantage in the betting markets on October 4, the broader stock market is still suggesting a Harris win.
Since 1928, the S&P 500 has had an 83% accuracy rate in predicting election outcomes.
If the S&P 500 posts a positive return in the three months leading up to election day, the incumbent party usually wins, and vice versa if the stock market posts a negative return.
Since August 5, when the three-month countdown to election day began, the S&P 500 is up 9%. As long as those gains hold until election day, the stock market predicts a Harris victory.