DDonald Trump is a crypto bro who will cut taxes and regulations, loves big banks and corporate mergers, doesn’t care about deficits, loves oil and hates wind and solar, and might actually leave RFK Jr .do crazy health stuff. This is, roughly, the picture of Trump that we get when we look at the market reaction this week to his re-election as President of the United States. In other words, the markets are saying he’s pretty much who many of us thought he was.

The immediately obvious conclusion to draw from the fact that the stock market soared following the announcement of Trump’s victory – along with all three major indexes struck records is that traders think it will be very good for business. But traders weren’t just buying stocks across the board; they were investing money in assets they believed would benefit from the upcoming Trump presidency, while punishing those they believed would suffer.

The number of sectors – and individual stocks – that traders believe will be affected by Trump’s victory is striking. This reflects Trump’s stated intent and willingness to use executive power unfettered. So we see traders scrambling to try to read Trump’s mind because they need to understand how his whims could shape the fortunes of multi-billion dollar companies.

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Sa version of This market reaction occurs after each election: government policy has a significant impact on company results, and the job of traders is to anticipate this impact on their holdings. It is also worth remembering that the stock market rose sharply in 2020 after Joe Biden’s victory seemed assured. So some of this week’s rise is likely the result of traders being relieved that we’re not heading into months of legal challenges and conflicts over who won. But from what he said during the campaign, Trump has very ambitious plans.

Even more clearly, he promised to impose across-the-board tariffs on almost all imported goods, and 60 percent tariffs on imported Chinese goods in particular, and to deport millions of undocumented immigrants. Trump can direct much of these measures on his own behalf, without seeking approval from Congress.

The Stock Exchange is therefore working overtime to analyze its various campaign promises: which it must take seriously and which it can ignore. For example, one promise that traders seem willing to ignore is Trump’s promise to let Elon Musk cut billions of dollars in federal spending. (Musk claimed, improbably, that he could cut “at least $2 trillion“, primarily by getting rid of government waste.) If traders had actually believed this was going to happen, the market would have sold off sharply, as government budget cuts of this magnitude would plunge the economy into a deep recession.

Instead, the market thinks Trump will do the opposite: far from embracing austerity, Trump is likely to cut taxes and increase spending, thereby pumping more money into the economy. This would increase the risk of inflation – ironically, given that Trump won largely because voters were angry at Biden and Kamala Harris over high prices – which is why on the first trading day after the Trump election, interest rates on 30 Treasury bills over one year increased by their largest margin in more than two years. This is because when the risk of inflation increases, bond investors demand higher interest rates to protect their position.

However, the real market action has occurred at the individual asset level, and the most obvious winners have been companies in industries that Trump plans to deregulate. Stock prices of oil drilling and related service companies, for example, soared on expectations that Trump would be a “Drill, baby, drill” president. The value of cryptocurrency assets and stocks also soared, because Trump should replace current Securities Exchange Commission Chairman Gary Gensler with someone much more tolerant of crypto than Gensler has been, and because Trump’s general attitude toward Financial regulation is lax at best. Since Trump himself paid for a memecoin During the election campaign, concluding that the crypto industry’s legal worries are largely behind this seems like a good bet.

Oddly, however, the Trump-themed memecoins themselves I did very badlywith the most popular Trump memecoin, literally called MAGA, down more than 50 percent this week, after initially climbing after Trump’s victory. And his social media company, Trump Media & Technology Group, is also on track to finish the week lower, despite many anticipating a Trump victory would be good for the stock. These two sell-offs appear to be a classic example of traders buying the rumor and selling the information.

Financial stocks rose sharply, with companies such as Goldman Sachs and Morgan Stanley posting double-digit gains on Wednesday, presumably on hopes that they too will operate in a more favorable regulatory environment. Another intriguing sign is that shares of Discover, being acquired by Capital One, saw a 17 percent increase. The merger has not yet been approved by federal regulators and is facing increased scrutiny, including from Democratic members of Congress, due to its arguably anticompetitive effects. The sharp rise in Discover’s stock price suggests that traders believe, almost certainly correctly, that for all of Vice President-elect JD Vance’s criticism of corporate consolidation, a Trump administration will be much more pro-M&A than the Biden administration has been.

The stocks whose rise represents the most worrying sign of what the Trump presidency has in store are those of Geo Group and CoreCivic, private prison companies that already do a lot of business running immigration detention centers. Geo Group also runs GPS monitoring programs for asylum seekers who have been granted parole in the country while they wait for their cases to be heard. If Trump expands facilities to detain people crossing the border and implements his plan for mass expulsions, demand for these companies’ services will increase sharply. Geo Group shares was up 42 percent Wednesday, and CoreCivic’s rose 29 percent.

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There they were losers Also. Electric vehicle makers, with the exception of Musk’s Tesla, have seen their stocks fall, likely because Trump is likely to eliminate electric vehicle subsidies. The same goes for renewable energy companies like First Solar, which will now operate in an environment in which the federal government has little interest, if not outright hostility, toward them. Tesla shares have resisted this trend, up 13 percent a day when most competitors saw their stocks fall. Traders know a company is destined for success when its CEO played a major role in the presidential election.

Stocks of home improvement retailers such as Home Depot and Lowe’s slipped Wednesdayalthough they recovered most of their losses by the end of the week. Part of the movement may be due to concerns about the effect of Trump’s tariffs, which will force retailers to raise prices or see profit margins shrink. But the main reason was that rising interest rates caused by the Trump tax cuts would hurt new home purchases and renovations – and more expensive mortgages are bad for the Home Depots of the world, even with more money in the economy. Real estate companies also saw their shares fall.

The most intriguing class of losers were companies in industries that could be targets of government action if Trump follows through on his promise to make Robert F. Kennedy Jr. a sort of health care czar. (At this time, it’s unclear exactly what this is, but RFK Jr. himself has claimed such a role in interviews.) Pharmaceutical companies that make vaccines, particularly those for COVID -19, saw their shares fall. Trump has said he wants to defund any schools that still have vaccine mandates (it’s unclear whether he’s talking about a COVID-19 vaccine mandate or a mandate that applies to all other type of vaccination). But it is clear that any exercise of power by RFK Jr. over his industry would be very bad news for vaccine manufacturers.

Less egregious but probably related, shares of consumer staples companies such as Pepsi and Mondelez fell. They didn’t suffer a terrible fall: the sector as a whole fell only 1.6 percent. But if RFK Jr. has an administrative position, then processed foods are a likely target for his attacks. “Make America Healthy” project – he has already released a video tackling a colorful dye found in many children’s foods. So it makes sense that investors in these companies would be concerned about how this rise could affect their businesses. This speaks to some tension in the relationship between Trump and RFK Jr.: The president-elect’s overall approach is focused on deregulation, while Kennedy’s instinct is focused on more regulation. Traders appeared to be betting that Trump’s tolerance for MAHA intervention would be limited.

Overall, markets remain fluid and buoyant, already showing signs that some investors have begun to reconsider their bets and unwind some trades. (Interest rates, for example, were back down Friday, in part because the Federal Reserve cut rates Thursday.) After all, traders aren’t just trying to judge what a volatile and often distracted president will do. decide to do. , but also how much his administration will actually be able to implement. The old phrase about Frank Sinatra comes to mind: It’s Trump’s world; the traders simply live there.