Goodmorning and Happy Thursday!

I have to admit, yesterday stung. With the S&P 500 and the Nasdaq dreadfully closing -1.4% and -3.7% (Nasdaq’s worst day since 2022), the market definitely flipped a script from its roaring bullish tune we’ve seen over the past few weeks.

(Source: Giphy) 

The Dow on the other hand closed at more all-time highs (up 0.5% on the day), while the Russell 2000 had its lump of -1.0% after its surprising 10-day rally. 

So as we can all see, it was more than a mixed bag yesterday, mainly due to the market's responses to Biden’s  chip restriction talks on China…

(Source: Yahoo Finance) 

As well as Trump’s “come at me bro” statements to Taiwan, basically telling the country (and everyone else) that America is NOT in the pro bono business. So it’s obvious that these two prominent political characters moved the markets in a not so hot way yesterday.

(Source: Giphy) 

However, with that said, while most investors are still wiping their tears off the floor this morning, the main takeaway is that Donny politics is back in the “moving” the markets business. And although his Taiwan comments played a role in Wednesday’s bloodbath as TSMC fell 7.9%... 

(Source: The Guardian) 

It’s clear that if he can play a major hand in moving the markets down, his choice of words and actions can move the markets up. 

Which is why, if you thought the AI hype train (may) have lost its steam after yesterday’s poor showing… Well, think again. According to reports, Donald Trump and his notorious entourage are arming up with an ambitious plan to catapult the U.S. to AI supremacy like never before. 

(Source: Washington Post) 

This new initiative, dubbed, “Make America First in AI” (love the creativity there), seeks to launch a series of so-called Manhattan Projects for defense technologies - where according to documents obtained by the Washington Post, this plan involves creating industry-led agencies to vet AI models and beef up defenses against foreign cyber threats. 

While also designed to fast-track AI advancements, particularly in military applications, by significantly reducing regulatory hurdles that Trump’s allies deem “burdensome.”

(Source: Giphy) 

In short, the plan calls for an immediate review and potential rollback of regulations imposed under President Biden’s administration, particularly those that mandate extensive safety testing for advanced AI systems. This subtle slap by Trump's allies is intended to foster a more dynamic environment for AI innovation, which so happens to align with the interests of Silicon Valley (thanks JD Vance), who have increasingly grown in favor of the former president. 

(Source: Technica) 

Which in light of recent events, makes sense. The dude survived an assassination attempt. Love him or hate him, it’s definitely bada$$, no matter which way you look at it. 

But again, the real interesting aspect to this new move by Trump’s allies, is that it paints a clear distinction between the two administration’s philosophies. 

(Source: Financial Times) 

As we all know, Biden’s approach has been all about caution and safety. His executive order from last October mandated rigorous testing for advanced AI systems, aiming to curb potential risks. Basically, the tech equivalent of putting on a helmet before riding a bike (which is understandable). 

Trump, on the other hand, wants to take off the training wheels and let Silicon Valley pedal as fast as it can. Which as one would expect appeals far more to tech entrepreneurs and investors eager to accelerate AI development without the constraints of stringent oversight. 

(Source: Giphy) 

So it’s clear that this brings a more “freedom” aura of “I know no limits” for the AI enthusiasts out there. Especially in the Valley. Which, in of itself, has evolved notably over the recent years. Looking back, prior to the time of this writing, Silicon Valley has traditionally held a stronghold of Democratic support.

But now, the tech hub is witnessing a growing infatuation towards Trump. Think, notable figures such as Elon Musk who has publicly endorsed Trump, by pledging $45 million (a month!) to a pro-Trump political action committee. 

(Source: WSJ) 

While other prominent venture capitalists, including Marc Andreessen and Ben Horowitz, have also indicated their support through significant financial contributions.

(Source: San Francisco Chronicle) 

Again, the shift isn’t just about politics - it’s about the hint of unshackled innovation that Trump and his policies bring to the table. 

And the appointment of Senator J.D. Vance as Trump’s running mate further underscores this commitment. With Vance being pro-tech, anti-regulation stance, and plainly being a Silicon Valley alumni himself, the message is clear: the future is bright for AI if Trump gets another term. 

(Source: Giphy) 

So with all that said, what’s the takeaway when it comes to investors? Well in short, if Trump is 1. Re-elected and 2. His plan takes off, the AI bubble will continue inflating faster than my stomach after my family's July 4th cookout. 

Deregulation could result in more innovation and more breakthroughs that lead to everything from autonomous weapons to advanced cybersecurity. 

Meaning companies like Palantir and Lockheed, who are already heavily in bed with the Pentagon, stand to gain big time benefits. Of course, there’s always a risk of deregulation turning our AI systems into the next Skynet (but that’s a buzzkill, so we’ll overlook that… for now). 

(Source: Giphy) 

In the end, as we inch closer to the 2024 election, the question isn’t just who will win, it’s what kind of future are we voting for? Will Americans look towards the more cautious, safety-first approach under Biden, or a no holds -barred tech renaissance under Trump? 

Only time will tell, but when it comes to the numbers in your portfolio, it’s definitely something to ponder on real… real hard. 

(Source: Giphy) 

Stocks.News doesn't hold any positions in companies mentioned.