Investing.com — Wolfe Research identified three distinct phases of what it calls the 2025 Trump Trade, highlighting shifts in market strategy as policy uncertainties evolve under the new US administration.
Wolfe expects investors to “price in” the “Trump Trade” in three phases. The first phase, which immediately followed the elections, is already over.
The second phase will occur when the agenda is discussed and implemented, especially during the first 100 days. The third phase will be followed by data, which will begin to indicate whether or not the collective impact of Trump’s agenda is positive or negative for growth.
Wolfe expects defensive growth stocks, including the “Magnificent Seven” tech giants, to outperform in the first half of 2025 as investors deal with the risks associated with tariffs, reconciliation laws and other policies.
Clarity on policies such as deregulation and trade in the second half is expected to benefit post-election sectors such as financial, industrial and consumer durables.
Wolfe believes that the initial period of policy uncertainty will dampen enthusiasm for cyclical stocks, favoring secular growth strategies instead. However, the passage of key legislation could act as a catalyst for market rotation later in the year.
