The whipsaw 2024 presidential election continues to surprise. It’s been less than a month since Vice President Kamala Harris jumped from the understudy of the 2024 Democratic presidential ticket to the starring role. Now, polls show her tied with Republican nominee Donald Trump, and in some cases ahead, marking a heady turnaround for once-demoralized Democrats who now sense a chance to banish Trump for good.

And just like that, the “Trump trade” has lost all momentum. The Trump trade is a set of investment choices premised on Trump winning a second presidential term, and, just as important, his party capturing both houses of Congress for complete Republican control of government. That would allow Trump to enact his agenda with minimal opposition from Democrats.

The basic premises for the Trump trade are that Trump would slash regulation, raise tariffs on imports, keep taxes low or cut them further, and ignore the mushrooming national debt. Higher tariffs are inflationary and might force the Federal Reserve to keep interest rates higher than they would be otherwise. So higher rates are core to the Trump trade. The economy might grow a bit faster once it mounts that inflationary hurdle. The national debt is a wild card because nobody’s sure when the market will start to balk at unprecedented amounts of federal debt. But whenever that happens, rates are likely to go higher still.

If there’s one single company that embodies the Trump trade, it’s Trump’s own — Trump Media & Technology Group, which goes by the ticker DJT. Trump Media, whose main product is the Truth Social network, is almost a pure-play bet on Trump’s election odds. If he wins, it could breathe life into a second-rate social network that has barely any revenue, since Trump will once again be the focus of world attention, routinely making news through his own posts on Truth Social. But if Trump loses, his political career will be mostly over, and Truth Social, puny compared with competitors such as Facebook and X, will have little reason to exist.

So how’s DJT doing? Not so great. After going public in March, the stock peaked at $66. Then it tanked in the midst of Trump’s New York business fraud trial, bottoming at $22 in mid-April. It yo-yoed after that, regaining ground as polls showed Trump widening his lead against Biden, even after Trump's convictions in New York. Since Biden withdrew on July 21 and Harris became the heir apparent, however, the stock has mostly fallen. It’s now at $27, down 59% from the March peak and just $5 above the April bottom.

Other Trump trades are less direct but still in retreat. Market watchers began spotting signs of the Trump trade in mid-July, when Biden was at his nadir and Trump’s election odds in betting markets peaked at around 66%. Around that time, economist David Rosenberg of Rosenberg Research wrote that “’Animal spirits’ have taken on a whole new head of steam because of this growing feeling that Donald Trump is going to emerge victorious.”

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The S&P 500 stock index hit its last record high on July 16, driven in part by the prospect of Trump winning the election with a Republican Congress that would keep all the Trump tax cuts from 2017 in place and maybe cut business taxes a bit more. Cryptocurrencies rallied, in part because Trump had turned from skeptic to believer, promising to treat crypto much more gently than Biden if elected. Some analysts also thought Trump 2.0 expectations were pushing rates higher than they would otherwise be, especially with the Fed poised to start cutting as early as September.

There were victims of the Trump trade too. In a July 16 interview, for instance, Trump suggested he might not intervene if China attacked Taiwan. Shares of Taiwan Semiconductor, Taiwan’s most important company, promptly fell 7%.

Now, with Harris on a roll, Trump’s election odds have dropped from the peak of 66% in mid-July to around 52%. Harris’s election odds are 46%, with third-party candidates accounting for the rest. Harris’s rally seems likely to continue for a bit longer, given that she hasn’t yet enjoyed the “convention bump” that typically follows each party’s nominating convention. The Democratic confab begins Aug. 19 in Chicago.

Markets, meanwhile, suddenly have a lot to price in other than Trump. New signs of a slowing economy and out-of-sync central bank policies helped trigger a recent sell-off that trimmed the S&P 500 by 5% in one week. Bitcoin and other cryptocurrencies have given back all their summer gains. Interest rates have dropped sharply during the last two weeks, as if everybody has forgotten about the risk of Trumpflation. Taiwan Semiconductor hasn’t fully recovered, but since Trump knocked down the stock in mid-July it has outperformed the broader tech sector, another sign of the Trump trade in reverse.

It's obviously an unpredictable election, so the Trump trade could return if Harris’s momentum stalls or something else gives Trump a fresh boost. It’s also possible a Harris trade could develop, based on the prospect of a Harris win with Democratic control of Congress. A month ago, a Democratic sweep looked like the least possible election outcome in 2024. Now, who knows?

Rick Newman is a senior columnist for Yahoo Finance. Follow him on X at @rickjnewman.

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