Greetings from Korea!
I will be returning Friday but wanted to send an Election Musings/Trump Trades To Think About piece in the meantime. I have so many thoughts flying through my head that I have been digesting for weeks - I need to get them out onto paper. I hope reading this piece will be helpful with your own thinking and investing in the coming weeks.
Small caps and mid-caps are seriously bid this morning.
The $230 level has been HUGE RESISTANCE for Ishares Russell 2000 ETF (IWM) since the 2022 bear market. That looks to be a thing of the past. The magnitude of the gap ABOVE THIS LEVEL strongly increases the odds that Small-Caps follow through, perhaps, quickly to all-time highs. Same for Mid-Caps, the Spdr S&P Mid-Cap 400 ETC (MDY), which is already at all-time highs...
For those looking to increase their small cap exposure, two new inflections for you:
I went long video company Vimeo Inc. (VMEO) late yesterday.
VMEO posted a $0.05 quarter, besting estimates by $0.04. VMEO has $300M+ in cash and while their consumer video offerings are in decline, their enterprise bookings are growing strongly, reaching a $100M run rate. Trading for less than 2x Sales, and with likely potential for $0.45 in earnings in 2026, no reason VMEO does not have a $10+ handle on it the next few quarters. Considering the stock has done NOTHING but go down since coming public, downside is de minimis. So, wonderful, asymmetric up vs. down.
Payoneer Global Inc. (PAYO) finally broke through $10 on the heels of another nice earnings beat yesterday morning.
PAYO marches to its own beat. Dip buying makes sense. I plan to add on any dip below $10 the next day or two, as I think $11.75-$12 is a layup into year-end, after PAYO smashed estimates. They are like clockwork each quarter.
Now, onto the dirty - Election Musings/Trump Trades To Think About.
#1. Bitcoin touched $75K overnight. It has run up a lot into the election though, so buying dips into favored names in the space seems the safest play in the coming days. $100K seems very likely in the first half of 2026 for Bitcoin. I plan to tuck some Ishares Bitcoin ETF (IBIT) away for the next few quarters this morning.
Sometimes the best trades are the simplest - for me, Bitcoin seems the easiest Trump trade to be long in the coming quarters. He wants to create a Bitcoin Reserve. Bitcoin will not be subject to tariffs. Bitcoin does not talk back to Trump. Trump will make it his baby and will do everything in his power to push it into the hundreds of thousands during his term. Why fight that?
#2. Tesla Inc. (TSLA) - this one stings. So right, yet, SOOO Wrong. Why on earth did you set a stop at $240, John? Time stop was the play. Oh well. The market, it's a cruel mistress, stopping us out by undercutting our stop by $1! While EV adoption will slow under Trump ("Drill Baby, Drill" should get oil to $50-$60 the next year or two), the streamlining of autonomous rules should help catapult Tesla into the $300s quickly. Congrats to those who held on.
#3. LNG Super Cycle, here we come - I expect Trump to quickly re-light LNG on his first day in office. IN THE NEXT 2-3 YEARS, I can make a case for how POWL heads to $500-$600, off of $20-$25 of EPS power in 2027. LNG contracts in the hundreds of millions for Powell Industries Inc. (POWL) are coming in 2025, adding tremendous fuel to the company's overall backlog, which is already at record levels with its A.I. and utility verticals on fire.
Chart Industries Inc. (GTLS) and Golar LNG Limited (GLNG) are names of interest I plan to zone into in the coming days and weeks. Assuming LNG inflects, strong upside seems likely for them too.
As a correlate to the LNG theme, getting long infrastructure names like Fluor Corp (FLR) seems strategic as well under Trump. FLR is bid up two bucks in early trading this morning.
#4 - Nuclear stocks - Trump loves Nuclear. Nuclear will be a big part of his domestic energy policy. He loves SMR's. I am dumbing it down and plan to buy a small position into Nuscale Power Corp (SMR) and Oklo Inc. (OKLO) today, two of the best small modular reactor (SMR) plays. Very low allocations here, as the space has been knocked back to earth after CEG's earnings whiff.
#5: Strong defense spending seems likely under Trump. Yet, the group has had a huge run due to the various wars afoot the last few years catalyzing worldwide defense spending. One question to ponder - if Trump lives up to his word, ending support for Ukraine will cause the way to end quickly, so are drone makers like Aerovironment Inc. (AVAV) an immediate short? Hmmmmm. Will watch AVAV starting today.
AVAV 1-YEAR DAILY
#6. For those looking for a hedge against their longs into year-end, Taiwan Semiconductor (TSM) comes right to mind. How long until Trump once again states he will not defend Taiwan from China (unless they pay U.S. for protection - sounds like a shakedown, to me, no?) TSM down almost $4 as of 5:25 Eastern.
#7: Shorting the 10-Year US Treasury ($TNX) is a very logical longer-term idea. Trump loves debt. Moreover, with his proposed trade policies likely to spur inflation, the Bond Vigilantes have to be getting restless. Will the 10-year sprint quickly to/through 5% should the Republicans actually take back The House too? 4.41% on the 10-Year as of 5:34 Eastern...
IF we see such a move in the 10-year, forget any more interest rate cuts. Housing stocks would then be a short on any move below $110.
#8 - One final piece of housekeeping - after a normal retracement to $109 after its initial run into the $120s, Reddit Inc. (RDDT) is poised to make new highs on the opening. I always like to take profits into big gap-up days, so I plan to sell a third to a half of my RDDT this morning. RDDT has been super-sized for me, so now it will go down to a comfortable longer-term weighting.
RDDT 8-MONTH DAILY
Speaking of longer-term, forget $162. I now see $200-$250 in RDDT as its earnings power seems much stronger than we originally modeled. EPS of $4-$5 in 2027 should be on the way, spurring a move not only to $162, but also, to $200-$250 should we be correct about the longer-term EPS power in RDDT.
Will leave things there. Good luck today…
Not even a few hours into a Trump-Elect era and I am already exhausted!
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Disclaimer: I am long VMEO and PAYO stock and calls. Assume I am selling and buying them today and maybe changing my positioning in each at a moment's notice without any regard to telling you about any such moves. The information contained herein IS NOT INVESTMENT ADVICE and should not be construed as such.
