Hello! President Trump

【Answer 1】 1. First, regarding the U.S. Dollar Index, President Trump’s return to office would strongly boost the dollar’s outlook. We’ve previously discussed the logic behind this: If Trump assumes office, based on his prior public statements, he would immediately halt U.S. support for the Ukraine-Russia war; the so-called ‘proxy war’ involving Israel would also likely end. U.S. strategy would shift toward comprehensive retrenchment—for example, ceasing joint NATO initiatives, raising tariffs, lowering corporate tax rates, and reviving past policies—such as taxing overseas corporate earnings—to incentivize repatriation of corporate profits to the United States. The foreseeable consequences include renewed domestic inflation, global economic stagnation triggered by U.S. trade protectionism, persistent trade frictions—but potentially reduced armed conflict. Demand for foreign military aid—and thus for U.S. Treasury issuance—would decline. Moreover, given Trump’s unpopularity among the establishment, he would likely struggle to raise funds at the scale achieved under Biden, limiting Treasury issuance. With less pressure to cut rates—and amid persistently high inflation—the market’s expectation of Federal Reserve rate cuts could accordingly weaken. Recall our previous report: the latest CPI data raised the probability of a September rate cut to over 80%. Thus, the path for rate cuts may become more volatile: a cut in September remains likely, but the total number of cuts expected by end-2025 may fall short of the four cuts currently priced into swap markets. 2. Trump’s return would usher in trade protectionism. U.S.-listed companies with large overseas revenue exposure—especially those required to repatriate profits and jobs—would face challenges. Industries with significant overseas sales exposure include, in order of magnitude: technology, followed by materials, energy, and industrials. Therefore, strong market expectations of a Trump presidency would likely trigger short-term volatility and pullbacks in U.S. equities. As the likelihood of Trump’s return rises, mega-cap tech stocks are unlikely to perform strongly. In particular, U.S.-listed firms generating substantial revenue from China—including Nvidia Corp., Broadcom Inc., and Qualcomm Inc. (chipmakers); Air Products & Chemicals Inc. and Celanese Corp. (materials firms); Tesla Inc. and BorgWarner Inc. (automotive companies); and Otis Worldwide Corp. (industrial company)—may face headwinds. Clean-energy and electric-vehicle firms have benefited from Biden’s Inflation Reduction Act; under Trump, that policy faces uncertainty, exposing stocks like Tesla, Rivian Automotive Inc., Lucid Group Inc., battery manufacturers, and component suppliers to downside risk. Conversely, energy companies may benefit from a Trump administration, given his pledge to lift restrictions on domestic oil production. Oil, natural gas, and traditional energy firms—including Baker Hughes, ExxonMobil, ConocoPhillips, Occidental Petroleum, Williams Companies, Halliburton, Devon Energy, and Chevron—could gain from pro-oil policies.

Stock splits truly boost share prices—but not for the reason you think.

【Answer 2】 The other highest-priced stocks in the S&P 500 include Booking Holdings (BKNG), trading at approximately $2,300; AutoZone (AZO), around $2,040; Chipotle Mexican Grill (CMG), about $1,600; and Mettler-Toledo International (MTD), roughly $1,350. A classic rationale for stock splits is that they make shares more accessible to individual investors—or employees—who might otherwise find high-priced stocks prohibitively expensive. For example, consider a company with a $2 billion market capitalization, 1 million shares outstanding, and a share price of $2,000. After a 1-for-10 split, it would have 10 million shares outstanding, each priced at $200, preserving the $2 billion market cap. Pre-split, each existing shareholder would receive nine additional shares for every one held. An investor previously willing to invest only $200 could now buy one share—and do so at $200 per share instead of $2,000. Companies aim for a diversified shareholder base comprising both institutional and retail investors—a group whose influence on markets and individual stocks has grown markedly in recent years. Yet this logic matters far less today than it did just a few years ago. Most brokerages now allow investors to purchase fractional shares—i.e., ‘slices’—of individual stocks. Fidelity, for instance, enables customers to buy thousands of U.S. stocks and ETFs starting from just $1. Robinhood users can even purchase one-millionth of a share. An investor can effortlessly acquire $200—or $1, or $10, or $54.31—worth of a $2,000 stock. A Fidelity spokesperson noted that last year, 2.3 million accounts used fractional-share trading. Moreover, many investors gain exposure via index-tracking ETFs, which already let them hold baskets of stocks at prices far below the aggregate cost of the underlying securities. In the past, splits could disadvantage investors who paid per-share commissions (rather than per-trade commissions). But in today’s zero-commission trading environment—now standard across most brokerages—this drawback has essentially vanished. Options trade in lots of 100 shares, so options contracts on high-priced stocks can be costly. Over the past two years, retail participation in options trading has exploded—potentially amplifying this effect. Yet this factor matters more for stocks like GameStop than for Amazon or Alphabet. Lower share prices make Amazon or Alphabet more likely candidates for inclusion in price-weighted indices such as the Dow Jones Industrial Average. While still speculative, Apple joined the Dow in 2015—just one year after executing its 1-for-7 split. Since its 1980 IPO at $22 per share, Apple’s stock has undergone five splits. Adjusted for splits, its IPO price amounts to just $0.10 per share.

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