Billionaire investor Scott Bessent predicted a continued stock market rally driven by expectations of former President Donald Trump potentially winning the upcoming presidential election.
He attributed this to investors anchoring on November 5 and believing in a return of Trump-era policies, including lower taxes, deregulation, and energy independence.
Bessent also highlighted the Federal Reserve’s role in maintaining market liquidity during an election year and suggests that Secretary Yellen’s potential stimulus measures could impact market conditions.
“Our firm: We study history. We think about the future. We try to analyze what’s going on in the present. And we came to the conclusion that this is a Trump rally, and it’s being driven by two different factors,” Bessent said.
“They will continue energy independence, secure energy, and then the risk of a foreign war erupting, I think, would be greatly diminished under President Trump,” he said.
He emphasized the potential impact of Trump’s lead in the polls on market expectations and policy outlook.
“The Federal Reserve is looking at these polls, and they are priming the pump. And look, this is nothing new. That is widely known since 1940. When an incumbent is running, the stock market never goes down in an election year. And why is that? Because the incumbent’s apparatus just keeps putting in liquidity,” Bessent said.
“Now, I think, here, that Secretary Yellen has put in or may continue to put in an imprudent amount of stimulus. We have these gigantic budget deficits,” he said.
“They are playing ball with Janet Yellen. They, recently, they switched to an easing bias [and] loosened financial conditions. So my point is, it’s twofold. We are at their nirvana stage right now,” he added.
“So investors can imagine on November 5 — come November, come January 2025 — we’ll go back to the Trump policies. And you’ve got Yellen, who, as we get closer to November 5, may even get more panicked,” he said.
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