Investing.com – Wolff Research has identified three distinct phases for what it calls the 2025 Trump trade, highlighting shifts in market strategy as political uncertainty develops under the new US administration.
Wolf expects investors to price the “Trump deal” in three stages. The first stage has already passed, which was immediately after the elections.
The second stage will take place during the discussion and implementation of the agenda, especially during the first hundred days. The third phase will follow data, which will begin to indicate whether or not the collective impact of Trump's agenda is positive or negative on growth.
In the first half of 2025, Wolff expects defensive growth stocks, including the “Big Seven” tech giants, to outperform as investors navigate risks associated with tariffs, reconciliation bills and other policies.
By the second half, clarity on policies such as deregulation and trade is expected to benefit sectors that gained after the election, such as financials, industrials, and consumer discretionary stocks.
Wolf believes the initial period of policy uncertainty will dampen enthusiasm for cyclical stocks, favoring long-term growth instead. However, the passage of key legislation could serve as a catalyst for market turnover later in the year.
