The intense battle of the general election, how did Trump become the "favorite" in the eyes of fast money traders?

According to Zhitong Finance APP, the volatility of the financial markets is often accompanied by uncertainty, and Donald Trump's impromptu style seems to be the catalyst for this uncertainty. Global fast money traders, however, see it as an opportunity, relying on the market's sharp fluctuations to make profits. In the lead-up to the first debate between Trump and Joe Biden, investors are trying to predict the potential impact of the Republican return to the White House on various industries, from electric vehicles to the direction of long-term interest rates.

Generally, the market tends to dislike uncertainty, but for certain hedge funds, as long as there is significant market volatility, regardless of the political winds, it is an opportunity for them. Looking back at the market dynamics during Trump's tenure, his remarks and social media posts often caught people off guard, causing short-term market volatility and providing traders with abundant trading opportunities.

Calvin Yeoh, portfolio manager at Singapore hedge fund Blue Edge Advisors, admitted that traders are more inclined towards Trump's unpredictability because market volatility brings them opportunities for "big waves sweeping away the sand". Despite experiencing major impacts such as soaring inflation, Russia-Ukraine conflict, and Fed rate hikes during Biden's presidency, Biden tends to favor traditional policy communication methods, while Trump prefers direct communication with the public through social media, bringing more immediate reactions to the market.

As the election approaches, market attention on the election results is gradually increasing, although currently overshadowed by speculation on economic performance and Fed policy. Vineer Bhansali, founder of asset management company LongTail Alpha, pointed out that the market is already prepared for the turmoil that Trump may bring, and if Trump wins and market volatility decreases, it will be unexpected.

Trump's unexpected victory in 2016 had a dramatic impact on the bond market, as the market expected his tax cuts to inject vitality into the economy, prompting the Fed to accelerate its rate hikes. This expectation drove a significant increase in the 10-year US Treasury yield in December, approaching a one percentage point increase.

During Trump's tenure, his remarks and social media activities often became the trigger for market turmoil. In 2017, Trump suggested that Puerto Rico should be relieved of debt after the hurricane disaster, leading to a sharp drop in Puerto Rican bond prices. However, when the market realized that the debt issue would be handled by the courts, bond prices gradually recovered. In 2018, Trump's criticism of Amazon, as well as the escalating threat of a trade war in August 2019, triggered sharp market fluctuations, with the S&P 500 index experiencing multiple days of over 1% ups and downs in that month.

Some long-term investors also expect that Trump's policy changes will create new investment opportunities. For example, Carol Lye, portfolio manager at Brandywine Global Investment Management in Singapore, mentioned the depreciation and subsequent rebound of the Mexican peso after Trump promised to build a border wall.

As Election Day approaches, Trump's policy stance and campaign promises are increasingly becoming the focus of Wall Street. Trump and the Republican Party have clearly stated that they will push to extend the tax cuts implemented in 2017, while Biden and the Democratic Party have expressed hopes to at least extend some of the tax cut policies.

Trump is also expected to take more aggressive measures to expel illegal immigrants and has proposed a tough stance on trade policy. These measures may bring upward pressure on inflation, affecting market expectations for Fed rate cuts.

Furthermore, some of Trump's informal advisors have put forward ideas for reforming the Fed. Although these ideas have not received explicit support from Trump and his campaign team, the market is concerned that such reforms may put political pressure on the Fed, leading to rate cuts driven by political motives and disrupting the bond market.

George Boubouras, research director at K2 Asset Management Ltd., emphasized that regardless of whether Trump wins, every word he says could have a magnifying effect on global markets. While the market likes volatility, traders are also trying to avoid getting too caught up in the emotional swings that Trump may bring.

Trump's impromptu style and policy stance have brought uncertainty to the market, but at the same time, they have provided rich opportunities for traders who can navigate market fluctuations