Trump Trade is Back

Published 2025/01/21, 12:45

Market scorecard

US markets were closed last night, but European equities edged higher with the Stoxx 600 index closing up 0.05%. Investors kept a close watch on Washington and Donald Trump's second inauguration, anticipating a wave of executive orders spanning energy, cryptocurrencies, and TikTok.


The Euro and British pound surged against the US Dollar, enjoying their biggest one-day gains in over a year on reports that Trump would hold off imposing tariffs on US trading partners on his first day in office.

In company news, Novo Nordisk (CSE:NOVOb)'s weight-loss drug Wegovy faces headwinds as the US government pushes for price cuts and a recent trial delivered disappointing results, challenging its early market dominance. The stock was down 4% yesterday in Denmark and has dropped over 10% in the last week.

At the Joburg close, the JSE All-share was up a tiny 0.04%. That's it.

One thing, from Paul

I've been contacted by a few clients asking me if I'm worried about Trump's executive orders, and his cabinet nominations. They want to know if we should "sell and retreat to the sidelines, then come back later".

My answer is a resounding "no". Our portfolios made good gains during the first Trump presidency, and I'm pretty sure they will do the same under his second. Also, trying to trade the market's daily ups and downs is a fool's errand.

The companies that we own make useful products and sell valuable services, for a profit. They will find a way to continue doing that, regardless of the regulations, tariffs, and other hurdles that will be put in their way.

Keep in mind that Trump loves the stock market. Any initiative from Washington DC that causes an equity selloff will get swiftly canned. Wall Street is his policy feedback focus group.

Byron's beats

There is so much talk about Eli Lilly (NYSE:LLY) and their exciting weight-loss drugs that we often forget about all the other things happening under the hood. Last week they announced a $2.5 billion cash purchase of Scorpion Therapeutics.

Scorpion Therapeutics has an experimental oral therapy in trials to treat breast cancer. Eli Lilly already has a strong cancer-drug pipeline and the two teams will work closely to get the drug over the line (FDA approval).

Building sufficient manufacturing capacity for weight-loss drug production is Eli Lilly's main task, but that will not distract them from developing the rest of their business. The cancer division is still front and centre.

Michael's musings

Bloomberg posted an interesting graphic showing the market's expectations for interest rate changes this year, and it's obvious that no one knows what to expect.

Most traders think that inflation will continue to fall, and as a result, interest rates will follow. Around a quarter of market participants think the opposite; that inflation will spike due to import tariffs, and that the Fed will have to beat a retreat and increase interest rates. A smaller group thinks there will be no change this year.

Over the long term, a company's share price is determined by how much it has grown profits. In the short term, share prices can be very sensitive to changes in interest rates or moving expectations about interest rates.

The graph tells us that the market will continue to be volatile around CPI data releases, Fed press conferences, and official trade tariff announcements. Given that we are long-term investors, we are less interested in discount rates and trade wars and more interested in finding and owning companies that can continually grow sales.

Bright's banter

Retail-focused trading platform eToro is gearing up for a potential IPO in New York this year, targeting a valuation exceeding $5 billion. The company, whose largest market is the UK, has filed confidentially with the SEC. CEO Yoni Assia has previously stated that a US listing offers broader investor access and deeper liquidity compared to the UK market.

Founded in 2007 by Yoni Assia, Ronen Assia, and David Ring in Tel Aviv, eToro began with a mission to democratize trading and make financial markets accessible to everyone. Initially focused on simplifying forex trading with a user-friendly interface, the platform quickly evolved, adding stocks, commodities, and later cryptocurrencies.

One of eToro's signature features is social trading which allows users to follow and copy the trades of top investors, fostering a community-driven trading experience. Over the years, eToro has grown to manage $11.3 billion across 3 million accounts. Its IPO plans follow a scrapped 2021 SPAC merger that valued the company at $10.4 billion.

After raising $250 million in 2023 at a $3.5 billion valuation, eToro is now eyeing a value boost. Goldman Sachs, Jefferies, and UBS are advising on the listing, which could launch as early as the second quarter of this year.

Signing off

Chinese markets experienced a rollercoaster ride as President Trump dampened earlier hopes for a gradual introduction of global tariffs. The mood shifted quickly after he warned of 25% tariffs on Mexico and Canada by February while staying vague on plans for China. Trump mentioned "meetings and calls" with Xi Jinping but didn't provide any concrete timeline for further action.


US equity futures have been very volatile, from well in the green to deep into the red, and currently pointing to a slightly higher open. The Rand has been equally volatile over the last 24 hours. It went from $/R18.78 to $/R18.49 and has settled at $/R18.60.

Have a good day, it's nice and sunny here in Joburg.

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