Trump Trade Index Tumbles 16%, Bitcoin Loses Post-Election Gains

Ned Davis Research's Trump Trade Index has taken a significant hit since May, falling roughly 16% and erasing its outperformance over the S&P 500. The index, which includes ETFs tied to homebuilding, defense, and domestic manufacturing, was once seen as a sure thing in late 2024.

However, escalating tensions between the US and Iran have pushed energy prices higher, leading to increased inflation expectations. This has led to higher interest rates, which are generally bad news for rate-sensitive sectors like homebuilding.

The stronger US dollar that accompanied these moves added another headwind for the reshoring and manufacturing plays in the index. The Trump Trade Index's original wide net included Bitcoin and space-related sectors as beneficiary themes alongside reshoring.

Bitcoin, which peaked above $125,000 following the 2024 election, has lost all of its post-election gains, with declines exceeding 50% from those highs.