Investing.com — Wolfe Research identified three distinct phases of what it calls the Trump Trade for 2025, highlighting shifts in market strategy as policy uncertainties evolve under the new U.S. administration.
Wolfe expects investors ‘pricing in’ the ‘Trump Trade’ in three phases. First phase has already passed, which was immediately following the election.
The second phase will occur as the agenda is debated and implemented, especially during the first 100 days. Third phase will be followed by data, which will begin to signal whether or not the collective impact of Trump’s agenda is positive or negative to growth.
In the first half of 2025, Wolfe expects defensive growth stocks, including the “Magnificent Seven” tech giants, to outperform as investors navigate risks tied to tariffs, reconciliation bills, and other policies.
By the second half, clarity on policies like deregulation and trade is expected to benefit sectors that gained after the election, such as financials, industrials, and consumer discretionary stocks.
Wolfe believes the initial period of policy uncertainty will dampen enthusiasm for cyclical stocks, favouring secular growth plays instead. However, the passage of key legislation could act as a catalyst for market rotation later in the year.
