Introducing From David’s Desk, a new newsletter penned by Carlyle Co-Founder and Co-Chairman David M. Rubenstein and other leaders across our firm. Each edition provides insights on public policy, geopolitics, and other topics in and around Washington, DC.

When history is written, the story of the 2024 election will most likely be seen as having two overarching surprises: (i) the decision by President Biden to not seek re-nomination (and thus re-election) following a debate with Donald Trump in which Biden's performance disappointed many of his supporters, and (ii) the re-election of Donald Trump, for he had been widely seen in recent years as having insurmountable legal problems in Federal and State courts. (It may be hard to remember but early in the nominating process, Donald Trump was badly trailing in public opinion polls to Ron DeSantis, the Governor of Florida. Trump, in the end, proved so strong in his own party that Ron DeSantis did not even make it to the New Hampshire primary, let alone become a serious challenger. Trump won all but one Republican caucus and primary.) In winning reelection, Trump became only the second President to win a second non-consecutive term, the first being Grover Cleveland in 1892.

Comeback stories are not uncommon in politics. Harry Truman was considered so unlikely to win in 1948 that some pollsters essentially stopped polling several months before the election, but Truman beat Dewey, to almost everyone's surprise, including Truman. Richard Nixon lost the Presidential race in 1960, the California Governor’s race in 1962, and was essentially written off politically. Nonetheless, he won the Presidential election in 1968. But these comebacks pale in comparison to the obstacles that Donald Trump overcame.

In my half-century in Washington, I have lived through, followed closely, or participated in thirteen Presidential campaigns. Of all those, this one has the most unclear outcome a few weeks before the election. And that is because, in brief, the country is honestly split down the middle between those who see Donald Trump as a strong political leader prepared to fight for America’s interests at home and abroad, despite the legal challenges and the, at times, blemished track record, and those who see Kamala Harris as the embodiment of traditional—and some new—Democratic principles and ideals (with the additional plus of being the first woman to become President and the person who can prevent Donald Trump from a second term—a high priority for her supporters).

Whether one admires him or not for his stances on various issues or his behavior, one cannot help but admit that his comeback must be considered the greatest comeback in American political life—impeached after the January 6th insurrection on the Capitol; indicted in New York and Georgia on state charges; convicted on 34 counts in the New York trial; found liable in two separate New York civil trials; indicted in two different federal courts by special prosecutor Jack Smith; discounted by most political pundits; heavily criticized by large numbers of those who worked in his first term; abandoned early in the process by some of his prior large financial backers; and running at an age which would have him become the oldest person ever elected President. Not since Napoleon was exiled to Elba has there been a larger and more unlikely political comeback. (Napoleon regained power in France for 110 days–a result once thought impossible after being forced out of his country.)

The Trump victory raises five overarching questions:

1. How did pollsters, with their increasingly sophisticated processes and analyses, miss the outcome of the election by as much as they did?
2. Why did President Trump win and Vice President Kamala Harris lose?
3. What will President Trump do in domestic and foreign policy early in his new term, a period when Presidents usually have an easier time getting their agendas approved and implemented?
4. Do the Democrats have a near-term path back to the White House or control of Congress?
5. What investment areas and categories are likely to be helped or hurt by the new Trump Presidency?

I recognize that the answers to these questions could be seen by some as partisan, but I am trying to be as dispassionate as possible in sharing my thoughts. While I worked in the White House for President Carter, that activity occurred more than forty years ago. Since then, I have stayed out of electoral politics, have never made any political contributions to someone running for President (and essentially no political contributions to anyone for a quarter-century), and have interviewed and had meals with President Biden, Vice President Harris, and President Trump. In short, I have attempted to answer these questions in an unbiased and balanced manner, though I am certain someone could claim the opposite in this day and age.

1. How did pollsters, with their increasingly sophisticated processes and analyses, miss the outcome of the elections by as much as they did?

There were seemingly an infinite number of polls before the election—having a poll named after your organization or university is apparently a good way to get publicity; and thus there are more polls than one can digest intelligently, and there is always a poll to fit one's preconceived notion of what the election’s outcome should be.

That said, there seemed to be a general consensus in the polling community that the Presidential election would be very close in terms of popular vote (with many feeling that Harris, like every Democratic nominee since 2004, would narrowly win the popular vote); that the Electoral College vote would be very close—with the key states being the traditional "swing states” of Michigan, Wisconsin, Pennsylvania, Arizona, and Georgia (and possible new “swing states” of North Carolina and Nevada); that the expected closeness of the Electoral College would mean the outcome might not be known for days, if not weeks; and that the Senate would narrowly go Republican while the House would narrowly flip to Democrat.

Of course, largely the opposite of this consensus occurred—Trump won the popular vote (though narrowly– 49.8% to 48.3%); he handily won the Electoral College vote (312-226), we knew the Presidential winner by Tuesday night (though the Electoral College count was not finalized for a few days); Trump won all of the “swing states”; the Senate went Republican by more than the one to two votes that had been predicted; and the House stayed Republican (albeit with technically no majority pending several House Republicans’ resignations).

So, what happened to the pollsters?

Polling uses numbers to tell you what people think, and the use of numbers implies a precision that is not really justified. Pollsters say their results are correct within a margin of error of roughly 2.5%. By that standard, the polling community did reasonably well, taking into account that they are not certifying numbers but reflecting the results of their surveys at the time the survey was taken (and people's attitudes change daily).

It should be recognized that pollsters, in addition to having polls that are only accurate within a margin of error, have four other problems:

1. Getting people to complete a survey is never easy. How many and what types of people have time to respond to a political polling survey?
2. Polling reflects the attitudes of an individual at the time the survey is conducted, and some people change their mind during elections–especially undecided voters.
3. Polling cannot accurately predict who will actually show up to vote. Pollsters can ask, but there are no penalties for someone saying they will vote and then not doing so.
4. Some people do not want to admit who they support. In certain circles, saying one will vote for Donald Trump may not be popular—and individuals answering a supposedly confidential poll—may reflexively be unwilling to admit they support Donald Trump. Similarly, some will not admit an unwillingness to support a black woman. (The phenomenon of not being truthful to pollsters is known as the Bradley effect. As I wrote in the last edition of this newsletter—many California voters in 1982 did not want to admit they would be unwilling to support the black mayor of Los Angeles for Governor, and simply lied to pollsters, resulting in pollsters predicting a clear Bradley victory when he ended up losing.)

Leaving these polling challenges aside, the election results showed this:

Trump did better with Hispanics and women than he had in 2020. (For instance, in 2020, Trump received 32% of the Hispanic vote and this time improved that number to 45%.) The most heavily Hispanic county in the US is Starr County on the Texas-Mexico border, with 98% of residents identifying as Hispanic. It had last voted for a Republican in 1892; but went for Trump this election.

The charts below show how Trump did better with various ethnic and demographic groups than in 2020.

In sum, Trump outperformed almost everywhere he needed to compared to his prior record. And Kamala Harris had a hard time beating the earlier record of Biden.

To illustrate this differently, there are 3,143 counties in the United States. In this election, at least 2,630 counties became more Republican and 301 became more Democratic compared to 2020. (Overall Trump won roughly 2,700 counties; Harris won roughly 440.)

Despite all of the above, Trump would have actually lost the election had Harris been able to win three Northern states that went blue in 2020—Michigan, Wisconsin, and Pennsylvania. She lost all three, but a shift of a total of roughly 230,000 votes in these three states would have had her winning each of those states and the election.

In fairness to Vice President Harris, she had a difficult mission—to assemble a campaign staff, raise the requisite campaign funds, develop a policy program, make endless appearances throughout the country, prepare for a Presidential debate, and meld what she would do or could do with an ongoing Administration's actions that she could not really control. Not an easy task.

2. Why did President Trump win, and Vice President Kamala Harris lose?

There is no one answer. As mentioned above, quickly assembling a campaign team and running a general election campaign would be difficult for anyone, and the Vice President was not as well-known as President Trump. Harris had to get core Democratic supporters comfortable with her while also trying to get undecideds to move toward her. Many Democratic voters, or those persuaded to vote Democratic, did not know Harris that well (her Vice Presidency did not provide many opportunities for visible wins), and she only had 107 days to try to cure that problem. For such a short period, Harris did better than some might have predicted at the campaign’s outset.

By contrast, President Trump had a loyal core of supporters and did not have to spend as much time focusing on keeping them. He also did not have to spend much time in traditionally red states to ensure he would win them. (Harris had to campaign extensively in traditionally blue states.)

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Those factors aside, voters seemed to focus on two main issues. The first was the economy. In the 1992 election, Governor Bill Clinton's campaign advisor, James Carville, famously said as part of the campaign’s main focus for the staff to remember, "It’s the economy, stupid"—i.e. that is the only real issue that matters. And he was right. The economy was perceived as not doing well and Clinton beat the incumbent George H.W. Bush (even though statistics later showed the economy was actually in reasonable shape and out of the earlier recession).

Similarly, high inflation occurred in the United States after trillions of dollars were injected into the COVID-affected economy by Presidents Trump and Biden. But inflation was receding in the second half of 2023—down to the 3% range. And while that sounds reasonable, it was on top of several years of inflation growth. The total level of inflation increased more than 20% since Harris became Vice President—a number that clearly soured a fair bit of the electorate. Individuals remember what the price of bread was three years ago, not that it has increased just 3% recently.

And related to inflation concerns, presumably, were higher interest rates that the Federal Reserve had put into place. While the Fed had begun lowering interest rates in response to lower inflation numbers, at the time of the election, the federal funds rate was 4.8% (compared to 0.2% during the 2008 election and 0.4% during the 2016 election).

As noted, despite the unfavorable perception of the economy by many voters, several key elements of the economy under President Biden and Vice President Harris were actually quite positive. During the Biden-Harris term, 16 million jobs were created (compared to 1.2 million jobs in the first four Obama years and 2.7 million lost in the first Trump term); the unemployment rate at the time of the election was 4.1%, and for much of the latter part of the Biden-Harris years was at near-record lows. By the time of the election, the stock market was reasonably strong (the S&P 500 increased by 50% from the Biden-Harris inauguration to the election, compared to 75% in the first full Obama term and 68% in the first full Trump term.)

The other issue of real resonance with voters, as measured by exit polls, seemed to be immigration, particularly the visible pictures of large numbers of immigrants regularly coming over the southern border illegally. Vice President Harris was labeled as having been the "border czar" (a title she never actually had) and thus received considerable blame for the large numbers of immigrants, some of whom were perceived as having participated in violent criminal activities in American cities.

The pictures of migrants trying to cross the border were deadly for Vice President Harris, but here too the reality never quite caught up with the pictures. According to US government statistics, the number of deportations and expulsions of migrants was significantly higher during the Biden-Harris years than under Trump, and the number of illegal immigrants entering the U.S. in 2023 and 2024 was lower than in 2018 and 2019. But perception was clearly the opposite.

Another issue that struck a chord was the debate over transgender individuals’ access to bathrooms and participation in sports aligning with their gender identity. Ads focusing on this debate blamed Harris for this kind of "woke" behavior and resonated with a fair number of voters. Her counter-ads did not seem to resonate.

Foreign policy is usually not a major factor in Presidential elections, unless the US has ground troops in harm's way and American soldiers are being killed. That was not the case this year, but the US was tangentially involved in two wars—supplying weapons and intelligence to Ukraine in its war against Russia and supplying weapons and some antimissile defense support to Israel in its wars against Hamas, Hezbollah, and Iran. While there is some increasing resistance among Republicans in the House to providing all-out support for Ukraine, there was probably little adverse impact to Harris from those supporting that view. However, the Middle East wars clearly had some impact as Muslims seemed to be voting for Trump in higher numbers than they had done so before. In addition, the Jewish community was split, as some were not pleased with the continued support—more or less–for what Netanyahu was doing in Gaza after the first few months of that war. And some parts of the Jewish community thought the Biden Administration should have done much more to support the Israeli government in Gaza. Harris was caught in between these opinions, and the likely result was lower Jewish support than Biden or Obama received.

Other factors accounting for the election outcome are a bit harder to pinpoint and reliably measure. But it is clear the Vice President had not been overly visible in the Biden Administration–compared, for example, to Vice President Cheney during the George W. Bush Administration—and there was an evident need to transition her image from a relatively low-profile Vice President to that of a capable Commander in Chief, all within a condensed timeframe. That was hard to do, especially when the opponent has already been Commander in Chief. To state the obvious, the Vice President is a woman—and no woman has ever been elected President of the United States; she is also biracial, with Jamaican and Indian heritage, a combination that may have resulted in some bias against her.

Of course, Barack Obama is also biracial, but as a man with unusually good oratorical and political skills, he was elected at a time when the country was finishing two terms under a Republican President (George W. Bush) and may have been looking for a fresh perspective from a different party.

Also difficult to measure is the appeal that Donald Trump had as a well-known individual, and as someone seen by many of his supporters as having been unfairly prosecuted for offenses that seemed to them politically motivated. In particular, the case in New York City relating to “hush" payments was seen as a weak case by many legal scholars. The conviction in a New York City courtroom likely fed into the notion that many Trump supporters already had—that he was being unfairly targeted because he was running again for President. For true die-hard MAGA voters, that case may have emboldened them to vote and get others to support Donald Trump. For undecideds, the case may have helped convince them that Donald Trump was indeed being treated unfairly.

Across the business community (and many of the highest income individuals in the country who were traditional Republican donors and voters), there was clearly an initial reluctance to support Trump in his efforts to win the Republican nomination. Many of his business supporters from the first term were clearly looking for another Republican to back for the nomination—one without the flaws they saw in Trump. They considered and provided seed funding for a range of possible candidates, including Governor Ron DeSantis of Florida, former Governor Nikki Haley of South Carolina, former Governor Chris Christie of New Jersey, and Governor Glenn Youngkin of Virginia. But the tide turned relatively quickly once Trump decisively won several early primaries and secured the nomination. It began to dawn on many leading business figures that, despite his legal and other problems, Trump could well be elected again. With this realization, purse strings began to loosen and many who had not been especially close to President Trump became generous donors. Elon Musk's $200 million plus contribution was not a one-off occurrence; it symbolized what was happening with lesser known but important business and financial figures.

It also cannot be ignored that President Trump was seen as a strong, aggressive leader—a person who placed America first. That image resonated with voters at a time when the US was seen by some as not aggressive or strong enough with both friends and foes. America First was once dreaded by many who later came to embrace it.

Finally, Donald Trump was a different candidate than in his prior campaigns in that he was more disciplined in what he said compared to his first run for President. He tended to follow the advice of his campaign staff to a greater extent than in his previous campaigns; he was indefatigable (for any age but certainly for a 78 year old); and he survived an assassination attempt that seemed to make more than a few believe that he had been saved by God for a higher purpose—serving as President again.

During the campaign, there may have been a brief moment when Trump and his supporters became a bit nervous—after the debate with the Vice President—a debate she was seen by many as having won. But, as with previous Presidential debates, the impact of the debate on the election outcome was negligible to non-existent. The earlier debate with Biden clearly impacted the election; the Harris debate seemed to have not.

One of the other problems Kamala Harris faced is the perception that the Democratic Party has increasingly moved leftward, presumably to enhance its appeal to working class voters without college educations. Yet the non-college educated voter base has increasingly moved away from the Democratic Party. Donald Trump was able in all of his Presidential campaigns to win a majority of the non-college educated vote.

To illustrate the problem, Fareed Zakaria has pointed out that Bill Clinton won the non-college educated vote in 1992 by fourteen points. Kamala Harris lost this same voter base by thirteen points—a shift of twenty-seven points. It is hard to escape the reality that Democrats are increasingly appealing to elites and Republicans are appealing to workers—a real change in the political world from decades ago.

A similar fact illustrates the point more starkly: Democrats in presidential elections have not won a majority of the white vote since Lyndon Johnson in 1964. And while the country is, to its good fortune, increasingly diverse and pluralistic, the largest single racial voter base is still white voters. For Democrats, winning is harder to do if they cannot capture a majority of this biggest voting group.

3. What will President Trump do in domestic and foreign policy early in his new term, a period when Presidents usually have an easier time getting their agendas approved and implemented?

After President Trump was elected in 2016, the preelection transition team led by Chris Christie was dismissed, along with all of their work. This time, President Trump has kept the pre-election transition officials and their work largely in place, allowing him to select and announce most of his cabinet extremely quickly.

(Not using FBI to do background checks initially helped this process move quickly, as well, but obvious problems have emerged as a result.)

After the 2016 election, President Trump was selecting cabinet officers and White House staff on recommendations from his friends and supporters, but much of the process involved picking individuals Trump had not really known, or not known well. Many were seemingly from central casting—Trump may not have known them, but they appeared to be fine in an interview and from watching the individual on television. Of course, some individuals he had worked with before, such as Wilbur Ross at the Department of Commerce, or had been actively involved in helping him get elected, such as Steve Mnuchin at the Department of the Treasury. But total loyalty to Donald Trump and his perspectives were not principal reasons why individuals were ultimately selected in the first term.

The result was that Trump did not feel many of his appointees were as loyal as he expected. He was upset, for instance, with Attorney General Jeff Sessions when Sessions recused himself from the Russia investigations. He was upset with his Secretary of State–whom he had not known previously–for a variety of reasons and fired him after just thirteen months. And Donald Trump went through four White House chiefs of staff—some of whom he had not known well or had not been strong political supporters.

This time, President Trump has picked individuals whose loyalty to him seems unquestioned. He knows many of these individuals and feels they will help him implement his agenda at all times, following his lead and his views.

As a result, it is likely that President Trump’s team will be highly focused on implementing the goals he campaigned on, whenever possible. It also seems likely that he will get virtually all of his appointees in place by the time of the inauguration—a rarity in recent administrations.

While Trump's initial choice for Attorney General had to withdraw, it is likely that most (but not all) of his other appointees will be confirmed. There are clearly some controversies around the nominees for Secretary of Defense, Director of National Intelligence, Secretary of Health and Human Services, and Director of the FBI, and it is not impossible that at least one or two will meet an insuperable roadblock in the Senate (largely for personal behavior related reasons). But with a 53-47 majority in the Senate, Republicans should be able to deliver Trump his appointees, even if some are not considered outstanding nominees. The personal animosity that a number of Senators seemed to have for Matt Gaetz, the first Attorney General nominee, does not appear to exist with many of the other nominees.

But the most immediate action that President Trump will likely take is not seeking legislation that his cabinet secretaries will need to work to pass. Legislation always takes time, and the new President will want to do one thing at the very outset—issue executive orders that reverse Biden policies and implement new Trump programs. President Trump did this in his first term; and with the advantage of more time and experience, a raft of new executive orders can be expected on January 20 and in the following weeks. Among these are likely to be executive orders diminishing the Biden Administration's support of climate change and renewable energy, including the opening of federal lands for more oil and gas drilling. Executive orders focusing on the deportation of undocumented immigrants are also very likely, as are executive orders restricting new immigration.

And to be sure, given the focus of the campaign, President Trump will no doubt impose some tariffs on existing trade partners—but the details of which tariffs are likely to be imposed on which countries is unclear at this stage. China, Mexico, and Canada seem likely countries to be affected at the administration's outset, though the levels of the tariffs may not be clear for a while. Immediate actions related to various indictments associated with the previous Justice Department leadership, and pardons for some of those involved in the events of January 6th and related legal convictions, can also be expected. Too, reversals of some decisions (relating to both specific companies and general policy) being sought by the SEC, FTC, EPA and other regulatory bodies can be reasonably expected.

It is not clear whether legislation to implement tax cuts promised by President Trump during his campaign will be ready by inauguration. Initial tax legislation is typically written by the House Ways and Means Committee, and all of the details of a tax bill may not be ready for some time. However, work can be expected early in the administration on a tax bill to essentially extend existing tax cuts from 2017 for another 7 years. And since Trump promised no taxes on tips, Social Security, and overtime during his campaign, these new provisions can be expected in any tax bill. There will inevitably be other additions, and lobbying for tax breaks to be included in the legislation is already underway. The main issue here will be how to pay for extensions of the existing cuts, as well as additional cuts promised in the campaign or those being sought by various interest groups.

Not much attention was devoted to the deficit during the campaign, which in the most recent fiscal year was about $1.8 trillion out of a $6.8 trillion budget. (Total federal indebtedness is about $36 trillion). The size of the deficit and the national debt do not seem to have been major concerns for voters, and therefore the candidates did not devote much time to how to reduce either.

All that said, President Trump did mandate Elon Musk and Vivek Ramaswamy to lead an effort to make the government more efficient, which is to say reduce costs. Musk has said he could cut $2 trillion out of the budget. That might be hard to do without reducing entitlement payments, defense spending, and interest payments—all relatively untouchable items, but time will tell. (More than 80% of the federal budget is Social Security, Medicare/Medicaid, veterans’ benefits, defense spending, and interest on the debt.) In any event, President Trump will no doubt issue an executive order creating the vehicle through which Musk and Ramaswamy might operate. Seeking legislative authority for this organization– tentatively the Department of Government Efficiency–may be difficult to get quickly, and it should be remembered every line item in the federal budget has supporters on Capitol Hill. That is one of the reasons no progress has been made in recent decades in reducing spending or cutting of federal employees. (There are roughly 2 million federal civilian employees, a number that has not really changed in decades.) However, underestimating Musk's abilities in the private sector has not been a winning strategy, as short sellers have learned.

On foreign policy, President Trump will clearly focus his early energies on trying to end the Russia-Ukraine war and on resolving the Israel-Hamas war (with a focus on getting hostages returned). He is apparently already doing so.

President Biden’s ability to resolve these wars has been reduced by his lame-duck status. Foreign governments and leaders clearly would prefer to do something with someone who might help them later (i.e., a new US President). But these wars have certain intractable issues— ones that are not susceptible to quick agreements.

4. Do the Democrats have a near-term path back to the White House or control of Congress?

Whenever a party loses control of the White House, there is concern that they might be out of power for quite some time, and that feeling may be exacerbated when the winning party is also in control of both houses of Congress. But history has shown that the out-of-power party inevitably seems to come back as the country tires of those in power.

When Richard Nixon was forced to resign in 1974 and Jimmy Carter was elected in 1976, many thought Republicans were doomed for generations. Yet Ronald Regan won in 1980. When George H.W. Bush won in 1988, giving Republicans three straight Presidential victories, many Democrats were concerned about their future. Four years later, Bill Clinton was elected. And of course, when Joe Biden took office in 2021, Donald Trump was seen as someone who would be spending the rest of his life in Mara-Lago fighting legal problems. In short, predicting election outcomes four years down the road is a fool's errand.

Today, Democrats have a number of individuals who will likely look to seek their party's Presidential nomination in 2028. Among them are Kamala Harris, who could well seek election as Governor of California in 2026 before deciding whether to run again for President; Wes Moore, the charismatic first-term Governor of Maryland; the very popular Governor of Pennsylvania, Josh Shapiro; the well respected Governor of Michigan, Gretchen Whitmer; the popular Governor of Illinois, JB Pritzker; the current Secretary of Transportation and previous Presidential candidate, Pete Buttigieg; and the current Secretary of Commerce, Gina Raimondo. No doubt a few Senators will take a look, as well, such as Amy Klobuchar and Cory Booker—both of whom ran in 2020. (There could be others. It is said that when a Senator looks in the mirror, he or she sees a future President.)

But the immediate focus of the Democratic Party will no doubt be capturing control of the House. Republicans control the House only by a 220-215 margin based on the election, though three members have resigned or will be resigning to join the Trump Administration. And the first midterm after a Presidential election usually has a President’s party losing House seats—the average since World War II is 24 seats. In more recent years, Clinton lost 52 seats; Obama lost 63 seats; Trump lost 40 seats; and Biden lost 9 seats. Bush actually picked up 8 seats—no doubt a reflection of the sentiment towards him after 9/11.

The Senate does not tend to change control as much in the first midterm of a President, though seats are sometimes lost by the incumbent President, but not as substantially as in the House. Since World War II, the incumbent President's party typically loses 2 seats in the first mid-term elections. In recent years, Clinton lost 8 seats; Obama lost 6 seats; Bush picked up 2 seats, as did Trump. Biden picked up 1 seat.

In the next mid-term, there are 20 Republican Senate seats up for election and 13 Democratic seats up for election.

It is too early to know which Senators might retire (Mitch McConnell is a real prospect for this) and which ones will have a tough time getting reelected. But the Democrats have two seats to defend in states just won by Trump (Georgia and Michigan), and the Democrats have six states to defend where Vice President Harris won by a single-digit percentage (New Hampshire, Virginia, New Jersey, Minnesota, and New Mexico). Only one Republican seat has to be defended in a state won by Harris (Maine) and one Republican seat has to be defended in a state that Trump won by a single-digit margin (North Carolina).

In sum, it is much too early to predict what will happen to the Senate in the 2026 elections. The House, based on historic patterns, is a better area where the Democrats are likely to focus their energies and be successful. And if they are, their ability to thwart some of Trump's initiatives will be strengthened, which should prompt the Trump Administration to front load its agenda.

5. What investment areas and categories are likely to be helped or hurt by the new Trump Presidency?

It may be a bit early to answer this question intelligently, for the Administration is still about fifty days away from taking office, but investors always like to be ahead of the curve, so here are some thoughts.

Industries likely to be helped by the Trump Administration:

Cryptocurrency

Some winners have already appeared; cryptocurrency and companies associated with the industry have boomed since Trump's election. While the enthusiasm may be a bit ahead of reality regarding what Trump can do to help the industry—or not hurt it, as Biden’s SEC tried to do—it is likely that the influence of the industry on the Administration will be meaningful, and thus helpful to the industry.

Artificial Intelligence

The entire AI industry blossomed under Biden, and it is likely to continue to grow dramatically, encouraged by many tech supporters of President Trump, including his most visible tech supporter, new AI company founder and First Friend Elon Musk.

Technology Broadly

If there is any area where the US still truly leads the world, it is high technology—from Apple, Google, Microsoft, and Amazon, to the small tech companies nurtured by the gigantic venture capital industry in the US. This industry is typically more Democratic than Republican. But we saw a shift this election when venture capital provided Trump (and Republican Congressional candidates) with large sums of money. Under the Biden Justice Department and FTC, the tech industry felt a bit hamstrung in getting mergers approved by the government, but this is not likely to be as significant a concern under Trump for small and medium sized technology firms. Whether the new Administration will continue to pursue cases filed under the Biden Administration is not known yet, but a more favorable ear to tech mergers and growth can be reasonably expected.

Oil and Gas

Under President Biden, the US has actually been producing more oil than at any time in its history—13 million barrels a day (the largest number for any country in the world). But the oil and gas industry was not pleased with the Administration placing some federal lands off limits for drilling, nor its strong focus on climate change and ways to promote renewable energy at the expense of carbon energy. Those concerns are likely to disappear, as the Trump Administration seems to be a strong proponent of increasing US oil and gas production. The new Secretary of the Interior has been given that mandate, among other responsibilities.

Defense

The US defense budget is already $900 billion and increased roughly 8% under the Biden Administration. But the Trump Administration will likely want to increase the defense budget significantly to ensure that capabilities of his America First policies have real teeth. Aside from that desire, the Defense Department's supplies have been depleted to some extent by providing weapons to Ukraine and Israel over the past few years, and increased defense spending is likely needed to replenish supplies the US once had in reserve. And as the war in Ukraine has shown, the future of military combat is the application of new technology in weapons—such as unmanned drones—which may drive a large increase in R&D and production.

Financial Services

The lowering of interest rates, which is likely to continue to some extent during the next two years, is likely to induce more borrowing, a source of profits for many financial institutions, including banks as well as many private credit businesses. Traditional venture capital and private equity businesses seem likely to see a benefit from lower borrowing costs and reduced regulation.

Housing

There is a large housing need in the country, and it is likely that lower interest rates will continue to induce homebuilders to build more and individuals and families to buy more new, and existing, homes

Industries not likely to be helped by the Trump Administration:

Automobiles

Tariffs on imported cars will probably affect the sales of those cars, while tariffs on parts used in cars manufactured in the states are likely to affect those sales as well. Too, the tax incentives for electric vehicles may be eliminated.

Agriculture

In response to US tariffs, other countries are likely to impose their own tariffs on US products sold abroad. Agricultural products are among America’s greatest exports. If such tariffs are imposed by other countries, it is likely that US agricultural sales overseas will decline (requiring large federal support for the industry, as occurred in the first Trump term).

Retail

Large retailers like Walmart sell an enormous number of products produced overseas. Tariffs will also make these products more expensive, reducing the sales of these retailers.

This newsletter has covered a great many subjects in a relatively compressed manner, and while events not yet anticipated may overtake scenarios I’ve discussed, this is designed to give a brief overview of a post-election world unlike almost any the United States has ever seen.