U.S. Presidential Election Possible Trump, Big Tech Stock, Government Bond Interest Rates, Bitcoin Surge

[News FM Lee Ik-seon Choi Soo-young Issue & People]

□ Broadcast date and time: November 6, 2024 (Wednesday)
□ Host: Lee Ik-seon, Choi Soo-young
□ Cast: Yeom Seung-hwan, director of LS Securities

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.

◇ Profit Line: We give you valuable information that makes money just by listening to this time well. Hit instructors in each field will tell you how to reduce taxes, how to reduce real estate stocks, and how to do so. Today, Yang Seung-hwan, director of LS Securities, came out. The biggest variable this week is the U.S. presidential election. I can't predict the actual outcome until the last minute, but the trend seems to be solidifying a little bit now, but what is the flow of the New York stock market before and after the presidential election?

■Yum Seung-hwan: The U.S. stock market, which ended early this morning, soared. But in the United States, Trump's election seems to be a good thing. Because they cut corporate taxes, they are active in easing taxes and regulations. It's actually good to do business. As a result, stock prices of semiconductors and big tech companies in the U.S. rose a lot today, and looking at the current election results, the probability of Trump winning the election seems to have increased a lot. So in particular, there are seven competing stocks, and Trump is winning six of them, so there is a real-time futures index in the U.S., where the U.S. stock market is soaring. If you look at that, I think Trump's election is a little high, but Korea is classified as a victim again if Trump becomes a victim. to the affected country I have to pay the tariff. So, because of that, the domestic stock market is plunging today, so it's a bit unfortunate. If you look at the stock market, the U.S. is in a good situation anyway.

◆Choi Soo-young: By the way, the employment index released last Friday night seems to devalue the level of shock differently from the current atmosphere. It's the worst since December 2020 just before the spread of the COVID-19 outbreak. What else does it have to do with the results of the presidential election?

■Yum Seung-hwan: So as you remember last time, Black Monday came on August 5th. The stock market crashed very hard. The cause of the global stock market was so bad that the July report in the United States, which was released at the time, was actually known as Texas at the time. There was a time when employment was cut once due to a hurricane. But at that time, there was an analysis that it might be because of that, but anyway, I was surprised by the market once because employment declined. But we learned it once. Again, the employment index came out much worse than then, but the stock market rose. The reason is that there are two hurricanes in the U.S. Two more came, and Boeing is going on strike. So if you reflect all of this, it wasn't that shocking. I saw it as a one-off. So, even though we have bad indicators, we can't just look at the numbers when we look at the indicators. We need to see the flow accurately. In the U.S., this will be restored anyway. That's why the stock market went up. Rather, if employment declines, it signals that the economy is not good. Then the interest rate should fall, but the interest rate went up that day. Rather, it can be said that the U.S. did not consider this employment indicator so important to the U.S. interest rate.

◆Choi Soo-young: That's why the mayor didn't respond to the numbers that much.

■Yum Seung-hwan: So the numbers are bad, but the contents of the numbers are temporary.

◇ Profit line: So interest rates have gone up now?

■Yum Seung-hwan: And now that the possibility of former President Trump's election increases, the prediction that the U.S. government bond rate will become Trump has been steadily rising, but the interest rate was 3.7 then. The U.S. 10-year Treasury bond rate has risen to 4.3 now. It went up a lot. So if Trump becomes president, he will increase his fiscal spending further. I'm going to release more money, and then interest rates usually go up. So right now, market interest rates in the United States are rising a lot right now.

◆Choi Soo-young: Looking at it today, I think Tesla and Bitcoin stocks are going up a lot. So these two states are actually linked to Trump's election.

■Yum Seung-hwan: So I heard that the price of Bitcoin was over 100 million today, but anyway, Trump said he would make Bitcoin a national strategic asset. So, from the perspective of those who invested in Bitcoin, of course, Trump is relatively friendly, so I think you'd like it to be possible, but as we go in that atmosphere, Bitcoin is cheering right now. I think we should look at it like this.

◇ Profit line: Does inflation follow in the face of growing fiscal spending?

■Yum Seung-hwan: That's right. If you increase your fiscal expenditure, you release the money. In the end, there is a high possibility of inflation because we release money and build factories, but anyway, if you look at the flow of the past two years, the reason why inflation in the United States came is because of the current demand, which has not been bought because of COVID-19, and the war in Ukraine was huge. At that time, the price of raw materials went up a lot. So, apart from the fact that the U.S. has released money, prices have risen a little because of such issues, but basically, if you release money like this, prices are going to rise. Of course, because the value of money falls and the value of assets goes up again, and in the case of the United States, consumption is going well now, so if consumption is good, prices basically go up a little. Therefore, inflation may rise a little anyway, but if you look at the price index recently anyway, the U.S. is still stabilized, and in Korea, it fell to 1.3 as it was announced yesterday. It only has an inflation rate of 1.3. It has fallen that much now, and in Korea, if the inflation rate falls below 1%, there may be fears of deflation in the future. So that's worse. In fact, prices in the United States and Korea were definitely similar. A few months ago, Korea was still in the 1% range, but the US was still in the 2% to 3%, so the situation in Korea is definitely not good right now.

◆ Choi Soo-young: It's still coming out on YTN screen.Ma predicts that the New York Times has a 90% chance of winning Trump in the U.S. presidential election. How do you predict the impact on the domestic semiconductor industry assuming that Trump was elected?

■Yum Seung-hwan: First of all, the negative thing is that when Korean products export to the United States, tariffs are applied. 10% to 20%. Because Trump talked about it. So, first of all, it can be negative in terms of the effect of raising prices, and the U.S. has built a semiconductor factory now, and they say not to give subsidies. This is negative, but regulating China will be worse. If you look at that, it's a good thing for us. But basically, for semiconductors, that policy is important, but in the end, it is driven by supply and demand, so the most important thing is AI demand. It's a structure that has no choice but to increase regardless of whether it's Trump or Harris. I think semiconductors and things like that are a bit neutral...

◇ Proficiency line: I see. Are you going to keep the price of gold going up for a short time? Will it go up?

■Yum Seung-hwan: Won't gold prices continue to rise again because Trump is here again? Because one of the biggest beneficiaries of the U.S.-China conflict is interest rates. So the composition is not going to change.