Keep buying ‘Trump trades’ through inauguration, Societe Generale says

Cryptocurrencies and banks have been on a tear since President-elect Donald Trump’s victory last week, and Societe Generale thinks these “Trump trades” have more room to run into January. The firm specifically underscored bank stocks, companies exposed to the reshoring theme, small-cap names and crypto. “Trump trades are in full bloom and should continue to outperform until Inauguration Day, in our view,” U.S. chief economist Stephen Gallagher wrote in a Thursday research note. “After that, fundamental US cyclical trades should continue to perform throughout 2025 (such as quality domestics US cyclicality via SG US Reshoring, US Banks, SG Global Nuclear, where the profit cycle is supportive).” From the Nov. 4 close — the session before Election Day — through Wednesday, the small-cap Russell 2000 jumped 6.8%. The SPDR Financial Select Sector Fund (XLF) has also rallied more than 7% during that period. Meanwhile, bitcoin briefly topped $93,000 for the first time on Wednesday. Gallagher is not the only one on Wall Street who thinks the “Trump trade” has more legs. “The markets are already well into pricing a ‘Trump trade’ that began in September, but the year-end rally has more room to run,” Jason Draho, head of asset allocation at UBS, said in a client note on Monday. Societe Generale said its Trump 2.0 thematic basket has jumped more than 7% in the week since the election, but it is only up 15% in 2024, compared to the S & P 500 ‘s 25% year-to-date gains. The basket still has plenty of room to catch up with the broad market index both in terms of valuation and performance, Gallagher added.