Heading into the Trump/Biden debate this week, Goldman was out with a useful note on their expectations for a Republican victory.
USD: Upside bias under a Republican victory
Tariff Policies: Trump has proposed several potential tariff policies, including a 10% across-the-board tariff on imports and a 60% tariff on imports from China. These tariffs are expected to strengthen the USD due to reduced import volumes and increased demand for domestic goods.Market Expectations: Prediction markets suggest a higher probability of a Republican sweep, which typically aligns with stronger fiscal conservatism and policies that favor a stronger dollar
US Stocks with high International revenue or supply exposure: Expect pressure for these types of stocks
Retaliatory Tariffs: The risk of retaliatory tariffs from other countries in response to US tariffs could negatively impact companies with significant international sales.Supply Chain Disruptions: Tariffs on imports from China could disrupt supply chains and increase costs for companies reliant on Chinese suppliers.Geopolitical Tensions: Heightened geopolitical tensions could further strain international operations and revenues for these firms. Technology and cyclicals are highlighted as sectors with the highest international sales exposures
This article was written by Arno V Venter at www.forexlive.com.
