Trump picks VP, Dow record close, bitcoin ‘digital gold’

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Record high
The Dow Jones Industrial Average closed at an all-time high after former President Donald Trump survived an assassination attempt. The S&P 500 hit an intraday high and Nasdaq Composite rose 0.4%. The prospect of Trump’s reelection is seen as a positive for small caps, the Russell 2000 gained 1.8%, touching its highest level since 2022 and recording a fourth straight positive day. The yield on the 10-year Treasury edged up as investors analyzed comments from Federal Reserve Chair Jerome Powell. U.S. oil prices declined.

Trump’s VP pick
Donald Trump has chosen Senator JD Vance of Ohio as his vice presidential running mate for the 2024 election. Trump announced his decision on Truth Social, praising Vance as the best-suited candidate after considering several others. The Biden campaign quickly criticized the choice, accusing Vance of enabling Trump’s “extreme MAGA agenda” and claiming both would prioritize tax cuts for the wealthy while raising taxes on the middle class. They also suggested that billionaires and corporations favor Vance, anticipating policies that would benefit them at the expense of the average American. You can track live updates here as Trump officially becomes the Republican presidential nominee. 

Fed may not wait
Powell said the central bank will not wait until inflation reaches its 2% target to cut interest rates. Due to the delayed effects of monetary policy, “if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” Powell said.

Bitcoin ‘digital gold’
BlackRock CEO Larry Fink, initially a bitcoin skeptic, now sees the cryptocurrency as “digital gold” and a potential safe haven for investors concerned about political instability and rising government debt. Fink believes bitcoin can offer uncorrelated returns and act as a hedge against currency debasement caused by excessive deficits. “I believe it is an instrument that you invest in when you’re more frightened though. It is an instrument for when you believe countries are debasing their currencies by excess deficits, and some countries are,” Fink told CNBC’s “Squawk on the Street.”

Goldman tops estimates
Goldman Sachs exceeded profit and revenue expectations for the second quarter, driven by stronger-than-expected fixed-income results and lower loan loss provisions. But Goldman’s well-known investment banking business disappointed compared to rivals; investment banking fees rose 21% compared with over 50% jump for both JPMorgan and Citigroup. Goldman CFO Denis Coleman said the bank was still No. 1 in terms of market share for mergers and the comparison had to do with better relative performance a year ago. Expectations have been set high for Goldman Sachs, with Wall Street businesses in the midst of a rebound after a dismal 2023. Goldman‘s shares rose 2%

[PRO] Retail puppy love
Tesla‘s recent rally driven by ‘retail puppy love‘ may soon end, Wells Fargo is warning. Analyst Colin Langan reiterated an underweight rating, contrasting with Wall Street’s bullish sentiment. Initially bearish this year, Tesla’s stock lagged behind its peers but surged 78% since April after accelerated product launch announcements.

Not only did Trump Media see shares soar 30% following the assassination attempt on former President Donald Trump, cryptocurrency also got a boost. This surge comes as political betting platform PredictIt suggests Trump is likely to win November’s election by a wide margin following the attempt on his life. The connection to crypto? Trump recently raised $12 million at a fundraiser hosted by tech venture capitalists David Sacks and Chamath Palihapitiya, where he criticized Democrats’ attempts to regulate the cryptocurrency sector.

At this point, financial markets are largely behind the Trump trade.

“The market, I mean, will prefer Trump. He’s more free market, he’s antiregulatory, for growth,” Wharton School finance professor Jeremy Siegel told CNBC’s “Squawk Box” on Monday.

But that growth comes at a price.

“On growth, if we have a red sweep, I think its more likely that we’re going to have more tax cuts — more than the 2017 tax cuts extended after the current expiration in late 2025. So that would certainly be a relative benefit for growth, albeit with higher deficits,” Michael Feroli, JPMorgan chief U.S. economist, told CNBC.

“The deficit is not on a good trajectory, even under current policy, and if extend all the tax cuts, which will probably happen under any scenario but perhaps a little bit more under a red wave, you’re looking at a pretty harrowing situation for issuance.” 

Goldman Sachs suggests a Trump second term could sustain the recent small-cap rally. The Russell 2000 gained 6% last week and 1.8% on Monday.

“The big wild card, on trade and immigration policy, there are a lot of unknowns, and if you go back to 2019, the first trade war, it did have a chilling effect on business sentiment and maybe some of that can be offset by deregulation,” Feroli said. “We really are entering an environment of pervasive uncertainty if you look at policy next year.”

Christopher Harvey, head of equity strategy at Wells Fargo Securities, told CNBC, “As the polls go up for Trump, you get a little bit more certainty, yes we can argue whether we are going to have tariffs or not have tariffs, but the probability of Trump that’s been good for the market. So that certainty is a small positive and that’s why you have seen the market go up.” 

“Regulation is coming down, who is that good for? That’s good for the banks, that’s good for the capital markets, M&A, IPOs and that’s where I think you can make money in this market.”

— CNBC’s MacKenzie Sigalos, Alex Harring, Yun Li, Hugh Son, Sarah Min, April Roach and Jesse Pound contributed to this report.