US/Global stocks under stress on Trump trade war 2.0 concern

·         ·         Risk trade is also under stress on the gradual withdrawal of Yen carry trade as BOJ may hike the repo rate to 2.00-2.50% by 2026-27 from present +0.50%

·         Overall, Trump’s plan may add around $1T/year against Harris’ $0.5T/year for the next 5-10 years if fully implemented

·         Wall Street may prefer Harris for policy continuity and predictability rather than Trump’s bellicose policies and unpredictability

For the last few weeks, Trump has been suddenly progressing against Harris, especially in the dubious betting odds. But Now approval rating of both is almost at the same level contrary to just a few weeks ago, when Trump was around 2% lower than Harris in approval rating and 5% lower in betting odds. Trump may be gaining due to frequent public interviews, town hall debates, active support of Musk (social media and money/funding power), and economic and immigrant issues. Trump’s nationalistic, trade protectionist and anti-immigrant issues are gaining more popularity among neutral voters.

Although Trump is now leading in betting odds for the 5th Nov’24 US Presidential Election, average approval rating/opinion polls are now almost at neutral levels.

In any way, the betting market is also indicating a Trump Trifecta 2.0, at least for the next two years until the US mid-term election in Nov’26. Nov’24 US election polling has already started in mid-Sep’24 and thus the market is now seriously taking these betting odds of Trump 2.0 and the repeat of Trump trade war tantrums.

As per current betting odds, Trump (Republicans) is set to win the White House, Senate (52-48) and House (312-226).

Overall, Trump’s bellicose trade war policies and tax cuts may add another $7-15T public debt over the next 10 years against Harris’ $2.0-4.0T

Trump's campaign (Republicans) for the Nov,24 U.S. Presidential Election focuses on several key areas, echoing his "America First" approach from his previous term, while adding new elements in response to current national and global issues. Here are some highlights of his policies and campaign promises of Trump:

Economy and Taxes

·         Corporate Taxes: May further lower the corporate tax rate than the 21% set during his previous administration. His goal is to make the U.S. more competitive in attracting global businesses and continue the Trump tax cut 1.0 beyond the 2025 scheduled expiration.

·         Deregulation: Plans to cut red tape and reduce regulations on businesses, aiming to spur growth and innovation and also oil fracking

·         Supply Chains: Wants to bring critical industries back to the U.S. and focus on reducing reliance on China and other foreign countries for manufacturing, especially in sectors like pharmaceuticals and technology

·         Thrust on Made in America rather than Made in China/Japan and imported to Americas by imposing minimum additional tariffs (import duties) at least 10-20% on all imported goods (to encourage/force even foreign companies to manufacture in the US); China may face higher tariffs to combat their lower production cost/state subsidies

·         Housing Affordability: Trump's 2024 campaign includes plans to create tax incentives for homebuyers and reduce regulations on housing construction. He links immigration control to alleviating housing shortages.

·         Child Tax Credit Expansion: Trump proposes expanding the child tax credit significantly, although details on funding this initiative remain vague

Immigration

·         Border Security: Trump's top priority remains building and extending the southern border wall. He advocates for strict border enforcement and reinstating remain-in-Mexico policies for asylum seekers.

·         Mass Deportations: He has signaled plans to expand the deportation of undocumented immigrants, especially those involved in crime

·         End Birthright Citizenship: Trump has revived a proposal to end birthright citizenship, meaning children born in the U.S. to non-citizens would not automatically receive citizenship.

·         Seeks legal quality immigration for the need of the US economy/labor force, but not illegal and criminal immigrants

Foreign Policy

·         Isolationism with Strong Defense: Trump's foreign policy continues to promote non-interventionism, with a focus on avoiding costly overseas conflicts. However, he promises to maintain a strong military and pursue policies that force allies to pay more for their defense, particularly within NATO. Trump has pledged to conduct the largest deportation operation in U.S. history, targeting illegal immigrants and those he deems a threat, including individuals with "jihadist sympathies"

·         Ending the Ukraine and Gaza War: Trump claims he can resolve the conflict in Ukraine and Gaza quickly but has not detailed how this would be achieved

·         Border Wall Expansion: Trump intends to complete and expand the border wall with Mexico, shifting military resources to bolster border enforcement

·         Travel Ban: Trump aims to reinstate and expand his previous travel ban on Muslim-majority countries, implementing "ideological screening" for immigrants

·         China/EU and Trade/Cold War: Trump has promised to toughen his stance on China, increasing tariffs and pushing for fairer trade agreements. He has previously called for decoupling from Chinese supply chains and critical technologies during Trump 1.0 (after COVID), but now also emphasizing that he wants stable/friendly and mutually beneficial trade & other geopolitical relationships with all including China/Russia; Trump claims both Xi and Putin are both his good friends.

·         America First Approach: Trump’s foreign policy continues to emphasize isolationism and prioritizing American interests over international commitments

·         US-EU trade links are ‘Mini China’: Trump is against the present form of US-EU trade links and again termed it as ‘Mini China’ (like Trump 1.0)

Energy and Climate

·         Energy Independence: Trump aims for complete U.S. energy independence, primarily through the expansion of oil, gas, and coal industries. He is critical of President Biden’s green policies and wants to reverse climate-focused regulations.

·         Fossil Fuel Promotion: Under the slogan "DRILL, BABY, DRILL," Trump plans to increase oil drilling on public lands and roll back regulations aimed at promoting electric vehicles, including exiting the Paris Climate Accords

·         Tax Incentives: Trump proposes tax breaks for fossil fuel producers while eliminating subsidies for renewable energy sources

·         Dismantling too much Green Agenda: Trump opposes Biden's climate initiatives like the Inflation Reduction Act that supports renewable energy, and would likely dismantle subsidies for green energy

Abortion

·         Pro-life Stance (Abortion Restriction): Trump remains firmly pro-life and is advocating for restricting abortion, though he has been vague on whether he would support a national abortion ban. Instead, he emphasizes leaving abortion laws to the states, consistent with the overturning of Roe v. Wade.

Healthcare

·         Obamacare Repeal: Trump has pledged to continue efforts to repeal the Affordable Care Act (Obamacare) and replace it with a system that gives states more control over healthcare, including offering private health plans and Health Savings Accounts (HSAs)-Healthcare reform

·         Affordable Care Act: While Trump does not plan to repeal the Affordable Care Act, Trump has called for taxpayer-funded fertility treatments, though this may face opposition from within his party for his anti-abortion stance, one of the main issues, he lost to Biden in 2016

·         Pharmaceuticals: Trump aims to lower prescription drug costs by encouraging competition and allowing states to negotiate drug prices

Education

·         School Choice: Trump is a strong advocate for school choice policies, including vouchers that allow parents to use public funding for private or charter schools. He argues this would improve education quality and provide families with more options.

·         Banning Critical Race Theory: Trump’s campaign continues to emphasize the removal of Critical Race Theory and other "woke ideologies" from public school curriculums

·         Department of Education: Trump has promised to terminate the Department of Education and influence local school districts by promoting merit pay for teachers and allowing parents to elect school principals

·         Curriculum Changes: Trump advocates for a curriculum that emphasizes "patriotic education," aiming to instill a love for the country among students (Nationalistic education policy)

Law and Order

·         Crime Crackdown: Trump has made law and order a central theme, promising a crackdown on crime, with support for expanding police forces and tougher penalties for violent offenders.

·         Policing and Riots: He advocates for increased funding for law enforcement and pledges to restore order in cities that have seen protests and riots

·         Crime Reduction Initiatives: Trump aims to dismantle drug cartels and address crime in urban areas, portraying Democratic-led cities as failing in public safety

Social Security and Medicare

·         Preserving Benefits: Trump has stated that he would not cut Social Security or Medicare benefits, criticizing opponents who have proposed reforms or cutbacks

Technology and Big Tech

·         Censorship and Big Tech Regulation: Trump continues to oppose what he calls censorship by Big Tech and promises to pursue regulatory measures to reduce the power of social media companies and tech giants, including possible antitrust actions; Trump may allow/force splitting of beg techs like Google/Alphabet

Overall, Trump's 2024 campaign promises are built on both a return to his prior policies (Trump 1.0) and adaptations to new challenges, with an emphasis on economic revival, immigration control, and reducing foreign dependence. But Trump's campaign for the 2024 presidential election is marked by a series of ambitious policy proposals and promises aimed at addressing various national issues. Trump's 2024 Presidential Campaign reflects a combination of traditional Republican values with a focus on strong executive power and a populist approach. Trump’s policies are designed to resonate with his base while addressing pressing national issues as he seeks a return to the presidency.

Rump/Republicans generally prefer corporate tax cuts and no major intra/fiscal spending; Republicans (right/far right) are generally fiscally conservative rather than Democrats, which prefer a higher tax on super rich, corporates, lower taxes on the middle class and higher fiscal/infra spending.

On the other side, Harris’s (Democrats) policies and campaign promises for the 2024 U.S. presidential election center on various social, economic, and political issues. Harris's campaign for the 2024 presidential election is centered around a diverse set of policies aimed at addressing key national issues. While her official platform (Election Manifesto) is still evolving, her track record and public statements suggest key areas of focus:

Economic Policy and Taxation

·         Harris is likely to emphasize creating economic opportunities for middle- and lower-income Americans, aiming for equity in wealth distribution

·         Middle-class tax cuts: Harris supports reducing the tax burden on middle-income families and expanding the Earned Income Tax Credit (EITC)

·         Taxing the wealthy: Harris advocates for higher taxes on corporations and the wealthy, particularly targeting loopholes and tax benefits that favor the super-rich

·         Support for small businesses: Harris’s focus would likely include policies to support small and minority-owned businesses, encouraging entrepreneurship and access to cheaper credit

·         Opportunity Economy: Harris emphasizes creating an "opportunity economy" that aims to reduce costs for families and strengthen the middle class. This includes tax reductions for middle-income earners and a proposed $6,000 child tax credit for newborns, along with a revival of pandemic-era expansions of the child tax credit

·         Housing Initiatives: She plans to build 3 million new affordable housing units and provide $25,000 in down-payment assistance for first-time homebuyers. Additionally, Harris proposes to eliminate taxes on tips for service workers and raise the corporate tax rate from 21% to 28% to fund these initiatives

·         Price Gouging Ban: Harris intends to implement the first federal ban on price gouging for food and groceries, aiming to protect consumers from unfair pricing during crises (Essential Commodities Price Control Act during any emergency)

Healthcare

·         Harris strongly backs expanding healthcare coverage, including:

·         Public option expansion: Building on the Affordable Care Act, Harris supports introducing a public option to ensure universal coverage while maintaining private insurance choices

·         Prescription drug pricing: Harris advocates for capping prescription drug costs, particularly for seniors and low-income families, and allowing Medicare to negotiate drug prices

·         Lowering Drug Costs: Harris aims to cap prescription drug prices and eliminate medical debt from credit reports. She has been involved in efforts that led to significant savings on prescription drugs under Medicare

Social Justice and Civil Rights

As a longtime advocate of civil rights, Harris focuses on:

·         Racial equity: Harris has consistently pushed for policies that combat systemic racism, particularly in policing, housing, and education

·         Criminal justice reform: Harris emphasizes reforms in law enforcement practices, reducing incarceration rates, and addressing racial disparities in the justice system

·         Voting rights: Harris strongly supports federal legislation that expands voting rights, reduces voter suppression, and reforms campaign finance laws

·         Gun Control: Harris's campaign includes proposals to prohibit assault weapons, mandate universal background checks, and advocate for red flag laws to combat gun violence

Immigration

Harris takes a progressive stance on immigration, promoting:

·         Comprehensive immigration reform: She supports a path to citizenship for undocumented immigrants, especially those brought to the U.S. as children (DACA recipients)

·         Ending harsh border practices: Harris advocates for more humane treatment of asylum seekers and the reversal of policies that separate families at the border.

·         Bipartisan Border Security Bill: Harris supports reviving a bipartisan border security bill that emphasizes strong border security while also providing a path to citizenship for undocumented immigrants. She has focused on addressing the root causes of migration from Central America through community investment initiatives.

Climate Change and Green Energy

Harris is committed to addressing climate change, with proposals including:

·         Green energy investments: Expanding renewable energy (RE) infrastructure, creating green jobs, and reducing reliance on fossil fuels

·         Environmental justice: Policies to ensure that marginalized communities disproportionately impacted by environmental hazards receive support and resources for clean air, water, and living conditions

·         Rejoining international climate agreements: Harris would likely focus on global cooperation on climate issues and support efforts like the Paris Agreement (in contrast to Trump)

Education

Harris supports educational reforms focused on equality and access, including:

·         Tuition-free college: Advocating for free community college and making higher education more affordable through increased Pell Grants

·         Investment in K-12 schools: Funding for under-resourced public schools, especially those in low-income and minority communities

·         Universal pre-K: Expanding access to early childhood education as a means to close educational gaps

Women's Rights and Reproductive Health

As a vocal supporter of women's rights, Harris champions:

·         Reproductive rights: Harris is committed to codifying Roe v. Wade and ensuring access to abortion and reproductive health services. Harris is committed to opposing any national abortion bans and aims to restore reproductive rights across the country. She also plans to codify anti-discrimination protections for LGBTQ+ individuals in various sectors

·         Equal pay: Harris advocates for policies to close the gender pay gap and provide paid family leave.

·         Childcare support: Harris promotes policies that provide affordable childcare to working families

Foreign Policy and National Security

Harris aims to focus on diplomatic solutions, alliances, and:

·         Strengthening global alliances: Rebuilding partnerships with traditional allies and addressing global challenges through diplomacy

·         Human rights advocacy: The Harris administration would likely place a high emphasis on supporting global human rights and standing against authoritarian regimes (like China, Russia, Iran etc) to promote electoral democracy

·         Support for Allies: Harris pledges to support U.S. allies and confront authoritarian regimes, particularly in the context of ongoing conflicts involving Israel and Ukraine. She advocates for Israel's right to self-defense while pushing for a two-state solution in Gaza.

·         Military Aid: Harris supports continued military assistance to Ukraine amid its conflict with Russia, emphasizing American leadership in global affairs

Overall, Harris's 2024 campaign reflects a blend of progressive (leftist) ideals and pragmatic approaches, aiming to resonate with both her base and moderate voters as she seeks the presidency in 2024. Harris's proposed policies for the 2024 U.S. presidential election, if implemented, could have significant fiscal costs and implications for public debt. While the exact numbers may evolve as her campaign releases more detailed projections, an analysis based on her prior proposals and general policy directions gives an estimate of the fiscal impact in key areas:

Healthcare Expansion: Fiscal costs around $1T over 10 years

·         Public Option: Expanding healthcare coverage through a public option would require substantial upfront costs, although it could be partially offset by savings from reducing uninsured emergency care and allowing Medicare to negotiate drug prices. Estimates from similar proposals suggest a cost of around $1 trillion over 10 years. Long-term, this might reduce overall healthcare costs, but the initial expense could increase the deficit.

Middle-Class Tax Cuts: Fiscal costs around $0.3T over 10 years

·         Harris’s tax cuts for middle-income families and expansion of the Earned Income Tax Credit (EITC) would decrease federal revenue. Estimates from previous middle-class tax cut proposals place the cost at $200 billion to $300 billion over 10 years, depending on the size of the cuts

Infrastructure and Green Energy Investment: Fiscal costs around $3T over 10 years

·         Harris has been a strong advocate for large-scale investment in green energy and infrastructure. Plans similar to the Green New Deal have been estimated to cost between $2 trillion to $4 trillion over 10 years. However, these could also generate new revenue streams through job creation and energy savings in the long run. Immediate funding needs would likely be met through new borrowing, adding to public debt in the short term.

Education: Fiscal costs around $1T over 10 years

·         Free community college and expanding Pell Grants would likely have an upfront cost of $600 billion to $1 trillion over a decade. Harris's support for universal pre-K and funding for K-12 schools would require additional spending, possibly around $500 billion over 10 years.

Social Programs and Childcare: Fiscal costs around $0.5T over 10 years

·         Harris's commitment to expanding affordable childcare and paid family leave could result in costs estimated between $400 billion to $700 billion over a decade. These programs would provide immediate relief to working families but would add to the federal budget, requiring either new taxes or deficit financing

Immigration Reform: Fiscal costs around $0.3T over 10 years

·         A path to citizenship for undocumented immigrants could have long-term economic benefits by increasing the tax base and workforce participation. However, upfront costs for processing, legal fees, and integration programs are estimated at $300 billion over 10 years. These could be recouped partially through increased tax revenues as more immigrants become legal taxpayers.

Revenue Generation and Corporate Taxes: Fiscal costs around -$1.5T over 10-years

·         To offset some of the costs, Harris proposes increasing taxes on corporations and the wealthy. A wealth tax or corporate tax reform could generate $1 trillion to $1.5 trillion over 10 years, depending on the specific rates and enforcement mechanisms. However, these estimates assume the wealthiest individuals and corporations do not significantly reduce taxable income through loopholes or offshore accounts.

Debt and Deficit Impact: Net Fiscal costs around $3.0T over 10 years after adjusting tax hike proposals

·         In total, the new spending under Harris’s agenda could range between $5 trillion and $7 trillion over a decade. Revenue generation from taxes on the wealthy and corporations might offset a significant portion of this, but even with aggressive taxation, the net fiscal impact could still add $2 trillion to $4 trillion to the national debt over 10 years.

Harris may also look to balance her progressive agenda with targeted spending cuts or adjustments in less essential areas to mitigate debt impact. Her fiscal strategy could involve phased implementation, allowing the economy to absorb new costs gradually while benefitting from job creation and increased consumer spending from middle-class tax cuts. In conclusion, while Harris's plan is ambitious and may involve significant upfront costs, much depends on the balance between tax revenues, economic growth, and how the policies are phased in.

Harris's campaign proposals reflect a commitment to expanding social safety nets and supporting middle-class families, but they also carry substantial fiscal costs that could significantly impact federal deficits and public debt levels over the next decade. The balance between increased spending and revenue generation through tax reforms will be crucial in determining the overall fiscal health under her administration if elected.

Trump’s policies and campaign promises for the 2024 U.S. presidential election focus on tax cuts, deregulation, immigration control, and energy independence. These proposals, if implemented, would have significant fiscal costs and implications for public debt. Based on his previous term and new campaign promises, here is an estimate of the fiscal impact:

Tax Cuts: Fiscal costs around $2T over 10 years

·         Corporate Tax Cuts: Trump has suggested reducing the corporate tax rate further from 21% (established by his 2017 tax cuts) to 15%. This would likely result in a revenue loss of around $500 billion to $1 trillion over 10 years, depending on economic growth and corporate tax compliance.

·         Middle-Class Tax Cuts: Trump has floated the idea of another round of middle-class tax cuts, similar to his 2017 Tax Cuts and Jobs Act (TCJA). Estimates for this second round of cuts suggest a potential cost of $1 trillion to $1.5 trillion over 10 years.

These tax cuts could stimulate short-term economic growth but would significantly reduce government revenue unless offset by spending cuts or economic gains. Previous analyses of Trump’s 2017 tax cuts showed that while they stimulated economic growth, they also added over $2 trillion to the national debt over a decade. His proposed tax cuts in 2024 could lead to a similar increase unless offset by cuts to spending.

Defense Spending: Fiscal costs around $0.6T over 10 years

·         Trump has called for increasing defense spending to ensure military readiness and modernization, particularly in competition with China and Russia. While exact numbers are not yet available, increasing defense budgets could cost an additional $500 billion to $700 billion over 10 years. His administration previously increased defense spending by hundreds of billions, and he may pursue a similar path in a second term.

Infrastructure Spending: Fiscal costs around $1T over 10 years

·         During his first term, Trump pushed for a $1 trillion infrastructure plan but it never fully materialized. He may revive a similar plan, promising large-scale investments in infrastructure like roads, bridges, and technology upgrades. The cost would likely be $1 trillion over 10 years, adding to public debt unless offset by private-sector partnerships or other revenue measures.

Immigration Control, Border Security, and Trump Wall: Fiscal costs around $0.2T over 10 years

·         Trump has consistently pushed for stricter immigration policies and additional funding for the U.S.-Mexico border wall. He would likely seek more funding for border security and enforcement, including finishing the wall, which could cost an estimated $25 billion to $50 billion. Increased immigration enforcement and deportation programs would also require more funding, potentially adding $100 billion to $150 billion over 10 years.

Energy Independence and Deregulation: Fiscal costs are almost neutral

·         Trump’s energy policy revolves around expanding fossil fuel production, deregulation of environmental protections, and promoting oil and gas exports. While this could boost revenues from energy companies, any revenue gains would likely be offset by the environmental and regulatory costs associated with deregulation

·         Deregulation could lead to short-term economic growth but may reduce government revenue from environmental fines and fees. The fiscal cost of deregulation is harder to estimate but could lower federal revenues by $50 billion to $100 billion over a decade

Healthcare: Fiscal costs around -$0.6T over 10 years

·         Trump has expressed interest in repealing or further undermining the Affordable Care Act (ACA), which could reduce federal spending by $500 billion to $700 billion over 10 years. However, he has not outlined a specific replacement plan, and repeal could leave many Americans uninsured, creating potential costs elsewhere in the healthcare system

Social Security and Medicare shortfalls: $1.5T over 10 years

·         While Trump has vowed not to cut Social Security or Medicare, his proposed tax cuts and spending increases elsewhere may force adjustments to these programs in the long term. Without addressing long-term entitlement spending, these programs' costs are expected to balloon. This could result in a $1 trillion to $2 trillion shortfall over 10 years, particularly as Baby Boomers continue to retire.

Trade Policies and Tariffs: Fiscal costs around -$0.2T over 10 years (revenue earnings)

·         Trump’s trade policies, including tariffs on China and other countries, are aimed at protecting American industries. While tariffs can raise government revenue, they also tend to increase costs for consumers and businesses. The net fiscal impact of tariffs is uncertain but likely to have minimal effect on overall revenue.

Revenue Generation and Economic Growth

·         Trump’s economic strategy relies heavily on supply-side economics, where tax cuts are expected to spur growth, job creation, and business investment. Proponents argue that faster economic growth could offset some of the lost revenue, but most estimates suggest that the tax cuts would only partially pay for themselves, leaving a significant gap.

Debt and Deficit Impact: Fiscal costs around $7T over 10 years

·         Overall, Trump's proposed policies could add $3 trillion to $5 trillion to the federal deficit over 10 years. The debt-to-GDP ratio is already high due to pandemic-era spending, and additional tax cuts without significant economic gains or spending cuts could further increase the debt burden.

·         If Trump implements all of his tax cuts and spending plans without significant offsetting measures, the U.S. national debt could rise to $40 trillion by the early 2030s, up from around $33 trillion currently.

Balancing the Costs

·         Trump's economic strategy is focused on growth through tax cuts and deregulation, but this approach relies on optimistic growth projections. If the economy does not grow as expected, the public debt could balloon. Any fiscal stimulus or increased government borrowing ($7-15T over 10 years) could lead to higher interest payments, further straining the budget and may also cause higher inflation.

In conclusion, while Trump’s plan may appeal to voters seeking lower taxes and economic deregulation, it could come with substantial fiscal costs and potentially lead to an increase in the national debt unless offset by faster-than-expected economic growth or cuts to spending.

Harris's proposed policies are estimated to increase federal spending by approximately $2T over the next decade. This includes expansions of tax credits such as the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC), as well as initiatives for affordable housing and healthcare subsidies. Harris plans to raise corporate tax rates to 28%, which is projected to generate around $1 trillion in new revenue over ten years. However, after accounting for various tax credits and economic impacts, the net revenue increase is estimated at $642 billion.

The combination of increased spending and limited revenue growth could lead to an increase in primary deficits by about $1 trillion on a conventional basis, escalating to approximately $2 trillion when considering dynamic economic effects, such as reduced GDP growth and employment. The overall impact on the federal deficit could reach as high as $3.5 trillion over the next decade when factoring in both direct spending increases and economic feedback effects, including slower economic growth.

The expansion of the CTC is estimated to cost about $1.6 trillion over ten years. Down payment assistance for first-time homebuyers could add around $140 billion in costs. Health insurance premium tax credits are expected to cost approximately $238 billion, while EITC expansions may add another $160 billion.

Harris's proposals reflect a commitment to expanding social safety nets and supporting middle-class families, but they also carry substantial fiscal costs that could significantly impact federal deficits and public debt levels over the next decade. The balance between increased spending and revenue generation through tax reforms will be crucial in determining the overall fiscal health under her administration if elected.

Trump's campaign promises for the 2024 presidential election are projected to have substantial fiscal implications, potentially adding significantly to the national debt, Trump's proposals are estimated to increase primary deficits by between $7 trillion and $15 trillion from FY26-35 through 2035, with a median estimate of around $10 trillion. This includes various tax cuts and spending increases, particularly in military and border security expenditures.

A major component of Trump's plan involves extending the Tax Cuts and Jobs Act (TCJA) and further reducing corporate tax rates to 15%. This extension is projected to cost approximately $5.4 trillion over ten years. Trump has proposed eliminating taxes on Social Security benefits, which could add about $1.3 trillion to the deficit over the same period. His plan includes a broad tax exemption for overtime pay, estimated to cost around $2 trillion in lost revenue over the next decade. While not as prominently featured as Harris's proposals, Trump has indicated support for expanding the Child Tax Credit, which could also add significant costs, although specific figures remain unclear.

To offset some of these costs, Trump has suggested imposing new tariffs on imports and cutting spending on environmental protections, which could generate approximately $3.7 trillion over ten years. However, these measures may not fully cover the anticipated deficits from his tax cuts and spending increases, Overall, Trump's campaign promises are expected to exacerbate the national debt significantly, with estimates suggesting an increase of approximately $10 trillion over the next decade when accounting for all proposed tax cuts and spending initiatives. This situation presents a considerable fiscal challenge for whoever wins the 2024 election, as neither candidate has outlined a robust plan to address the growing national debt effectively.

Conclusions:

Overall, even if Trump wins Trifecta (simple/absolute majority), and can extend his 2017 era tax cuts beyond the scheduled expiry of 2025 with fresh tax cuts, his bellicose policies and constant trade war rhetorics (like Trump 1.0) may be negative for the Wall Street. But as a trade war currency, USD may gain (already gaining in anticipation). Also, Trump's plan may add around $10T in fresh debts over 10 years; i.e. $1T every year if Trump can pass all his plans through US Congress.

This is against Harris’s plan which may add around $4-5T debt over 10 years (assuming Harris may not be able to hike tax on super riches and corporates as in any electoral democracy, Corporate funding and lobbying control everything). In brief, Harris’s plan may add around $0.5T of fresh debt/per year on average for the next 5-10 years against Trump’s $1T. Thus Trump’s plan is fiscally more expansive than Harris's and may cause more public deficit, debt, currency devaluation and inflation; this is positive for Gold and negative for bonds (as the government has to issue more debts to fund deficit spending).

Also, Trump trade/cold war tantrum 2.0 is negative for China, China-savvy US MNCs, techs, EMs, EU/Europe and even the US economy itself as the US industrial/ traditional infra is now far behind China. Trump’s thrust into manufacturing everything in the US will be inflationary even after considering FX factors. But Trump’s anti-war stance may bring the Ukraine and Gaza war ceasefire earlier than Harris. Trump may also deny fresh grants to ‘the world’s smartest salesman Zelenskyy and even Israel PM Netanyahu, the world’s most smart victim card player).

Bottom line:

The US election voting is already under way since mid-September and the last date of voting is 5th Nov’24. Trump may be getting more support from Corporate America due to his tax cut policy and deregulation thrust. But at the same time, Harris may get more support from female voters (pro-Abortion stance), minority/immigrants and middle class/lower middle class. Thus the fight will be tight.

Overall, Harris 1.0 may be better for Wall Street rather than Trump 2.0. Harris’s Presidency may ensure greater policy continuity and predictability than Trump. Although, Harris 1.0 will also continue Trump/Biden era tariffs and cold war strategy, Trump trade war tantrum is much more damaging. Thus despite Trumpflation (reflation) optimism, stock markets on both sides of the Atlantic as well as the Pacific are under stress. Also, the risk trade is under stress on the concern of gradual withdrawal of Yen carry trade as BOJ may set to hike its repo rate from 0.50% at present to 2.00-2.50% by 2026-27 against Fed’s 2.75-3.0%.

The US is already now paying around 15% of Federal core tax revenue as net interest payment on Federal public debt, which is quite high if compared with China/EU’s 6% levels. Also if we consider state public debts, combined US Public debt is now above $40T for FY24. Recently, US Treasury Secretary Yellen said net interest/nominal GDP should not be over 2%, which is now actually around 2.40%. The market is also concerned about rising public deficit and debt, most of which is going for social schemes rather than infra projects like in China. This is affecting the productivity capacity of the economy and also causing inflation.

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

Whatever the narrative, technically Dow Future (42500) has to sustain over 42700 for any further rally to 42900/43050-43250/43500* and 43700/44000-44500/44800 in the coming days; otherwise sustaining below 42600/650, DJ-30 may again fall to 42400/42300-42100/42000 and 41800/41500-41200/41000* and further 40700/40300-40100/40000* and 39700/394350-39000*/38500 in the coming days.

Similarly, NQ-100 Future (20200) has to sustain over 20400 for a further rally to 20600/20700-20800/21050* and further to 21300/21700-21900/22050 and even 23000 levels in the coming days; otherwise, sustaining below 20350/300, NQ-100 may again fall to 20000/19750* and 19600/19350-19100/18900 and further 18750/18550-18400/18200-17950/17600 and 17450-17300/17000 in the coming days.

Technically, SPX-500 (5780), now has to sustain over 5850 for any further rally to 5900 and 6000/6050-6100/6150 in the coming days; otherwise, sustaining below 5825/800, may again fall to 5725-5675/5625-5600/5575*-5550/5500-5475/5450 and 5425/5390-5370/5300* and 5250/5100* and further 5050/4950*-4850/4750 in the coming days.

Also, technically Gold (XAU/USD: 2625) has to sustain over 2655 for a further rally to 2675*/2700-2725/2750 in the coming days; otherwise sustaining below 2650/2645, may again fall to 2625 and 2595/2590-2585/2575, may again fall to 2560*/2540-2530/2515 and 2495/2480-2470*/2425 and further 2415/2400-2390/2375 in the coming days (depending upon Fed rate cuts and Gaza/Ukraine war trajectory).