“This doctrine will undoubtedly continue—it hasn’t stopped. Tariffs will undoubtedly remain and will increase. Judging by all the appointments, Trump’s new administration consists of radicals and isolationists. This will have its effects, and there will be marked changes in U.S. policy, which will largely be refocused. However, we can expect that the main changes will occur within the U.S. itself. Being Trump’s final term, Trump 2.0 will have nothing in common with Trump 1.0.”
The initial effects of Trump’s return to the White House have already played out in the markets, and it is difficult to predict exactly how they will develop in the future. Technology giants represent a huge share of the S&P 500, and if for any reason they fall out of favor with the new administration—and there are hints of this—it is “highly likely we’ll see significant volatility.”
Some sectors will rise, while others will fall significantly. There will be decisions that affect certain sectors, but these are likely inversely linked to other sectors. We anticipate a somewhat more volatile market. The market is now exhausted; estimates suggest that over the coming decade, returns may be around 3%-4% per year, rather than the historical 10%.”
So far, the U.S. market has been viewed as a whole, but from now on, clear and distinct segmentation is expected, Panayotov added.
There are expectations for a significant reduction in regulations in the U.S., as sectors like finance and banking have suffered significantly in recent years from being burdened with atypical responsibilities. This will have a positive effect, but it must be done carefully, Panayotov commented.
“Trying to turn such a large ship with a very sharp turn in just four years is likely to cause half the containers to fall into the ocean. There will undoubtedly be changes in the administration, but how successful they will be and how many problems they will create in unforeseen areas—I’m betting more on the latter, but this will be an internal American issue.”
Trump’s new term will be positive for Europe, both for the markets and for necessary changes in defense, Panayotov believes. Trump could turn out to be the external push that forces the EU to take care of the development of its capital markets, he added.
Both the U.S. and China will try to attract allies in the process of reorganizing global relations, which will affect investment flows and markets, Panayotov said.
“The battle for natural resources will intensify, which is extremely positive for countries like Egypt, Turkey, Nigeria, and a range of African nations where natural resources are available. The competition for these resources will be fierce because China is far ahead of the U.S. The net positive effect will be related to these countries.”
How to trade Chinese stocks, how European stocks will perform under Trump, and the future of the 60/40 strategy can be seen in the video.
