Trump Trade Strategy Falters Amid Iran Conflict and Inflation Concerns

The 'Trump Trade' strategy, which identified stocks expected to benefit from President Trump's economic policies, has lost steam in recent months. The Ned Davis Research index, a gauge of these stocks, has slumped about 16% since May after initially outperforming the S&P 500 Index at the beginning of the year.

The decline is largely attributed to the US conflict with Iran, which has pushed up energy prices, inflation expectations, interest rates, and the value of the US dollar. According to Pat Tschosik, chief thematic strategist at Ned Davis Research, 'All this is tied to the Iran war and inflation.'

Several exchange-traded funds in the gauge are now trading lower for the year, indicating a shift away from the Trump Trade strategy. Tschosik also noted that it's been challenging to navigate the market without some sort of supply shock or disruption.