In 2016, several marquee hedge fund managers said markets would plunge on a Trump victory. But the S&P 500 has yet to close below its Nov. 8, 2016, level and has returned more than 50%, including dividends, since. It set another record high Tuesday.
For Bessent, stricter labor and environmental standards for trading partners, a “dramatic rethink” of antitrust policy and steps to empower workers are among Warren’s proposals that could erode assets stateside.
Warren has also called for “actively managing” the level of the dollar to bolster exports and domestic manufacturing.
“A dramatically weaker dollar, conveniently one of her policy prescriptions, is, in our view, the best way to play the rising chance of the Senator moving into the White House,” the fund’s letter said.
The letter didn’t indicate the size of the fund’s dollar wager. A spokesman for Key Square Capital declined to comment. The Wall Street Journal previously reported on Bessent’s dollar position.
Dollar Blame
Trump has been vocal about the dollar as well, blaming its strength for hurting U.S. exports. A broad measure of the greenback is up about 1% this year, building on last year’s gains.
Bessent, who spent much of his career working for George Soros, founded Key Square in 2016 with $2 billion in backing from his former employer. While still with Soros, Bessent made $1 billion in late 2012 and early 2013 on a bet that the yen would tumble.
Citing the roughly 31% gain in stocks in 1980 in the seven months before Ronald Reagan’s election, Bessent said the inverse could happen with Warren.
“We posit that if the U.S. equity markets are spooked by a Warren presidency, most of the decline may have occurred by Election Day.”