2026's biggest trading theme: Trump can't afford to lose the end of the international order.

In 2026, the global macro market is undergoing a profound paradigm shift. Senior analyst David Woo believes that facing immense pressure from the midterm elections, the Trump administration is showing a determination to reverse the situation at all costs, which will reshape the global asset pricing logic from energy to gold. David Woo stated that in order to make up for severe polling disadvantages and avoid losing majority seats in Congress, the Trump administration's policy focus has shifted entirely towards winning the affordability debate. This means that the ultimate trading theme in 2026 will shift from simple re-inflation to radical deflationary measures - especially by significantly lowering oil prices through strong control of energy resources, with the goal of reducing gasoline prices to a critical psychological level before the election. This strategy is not only aimed at controlling inflation but also at stabilizing votes by improving the cost of living for the middle class. Trump's actions in Venezuela earlier mark a substantive end to the post-war rule-based international order. This move is not based on ideological considerations but rather on directly controlling energy resources, with the aim of winning domestic "affordability arguments" by significantly increasing supply. Trump's goal is to lower gasoline prices to $2.25 per gallon before fall, which is expected to have a drastic impact on the oil market, with oil prices expected to fall to the range of $40 to $50. Woo warns that as the United States abandons its traditional role as a guarantor of the international system, global geopolitical insecurity will sharply rise, providing strong support for gold and benefiting the defense industry. On the contrary, emerging market stocks will face the risk of revaluation, as the security premium for small economies will no longer exist in the era of power politics. Midterm elections that cannot afford to lose David Woo's analysis points out that the biggest backdrop of the macro narrative in 2026 is the midterm elections. Although Trump controlled market trends in 2025, his approval rating is currently hovering around 40%, facing a huge deficit of about 20 percentage points compared to historical norms. For Trump, if the Republicans lose control of Congress in November, his second term will be trapped in an endless nightmare of subpoenas and impeachment. Therefore, the political theme of 2026 is "throw the kitchen sink." White House Chief of Staff Susie Wiles has explicitly stated that Trump's campaign efforts in 2026 will be equivalent to the 2024 election year. This political survival pressure will directly shape the United States' economic and foreign policy decisions, forcing the government to take unconventional measures to please voters, with the core lever being to address the cost of living crisis. New structural bull market. At the same time, the market should be wary of the upcoming massive fiscal stimulus, as Trump is expected to use tariff revenue to distribute cash checks to the middle and low-income groups, exerting new upward pressure on long-term U.S. bond yields and fundamentally altering the macro liquidity environment in 2026. New energy strategy: the political account of lowering oil prices In order to win the affordability debate, the fastest and most direct means of the Trump administration is to lower oil prices. David Woo said that the recent actions by the United States against Venezuela were fundamentally motivated not by ideological output but by direct control of the country's oil resources (which account for 18% of the world's proven reserves), in order to increase supply and suppress global oil prices. The goal of this strategy is to lower U.S. gasoline prices to around $2.25 per gallon by September or October. For the market, this means that one of the core trades in 2026 is shorting crude oil. David Woo predicts that oil prices could fall to the high range of $50 or even $40 per barrel by the end of the year. This geopolitical move will make OPEC the biggest loser, significantly weakening its market control power, while oil-importing countries such as India and Japan will benefit from it. Tariff refunds and the reversal of the K-shaped economy In addition to lowering oil prices, another potential major move is massive fiscal stimulus. David Woo predicts a 65% probability that Trump will announce a new round of stimulus before the mid-term elections. The specific path is to use the huge tariff revenue collected last year to distribute $2000 "tariff refunds" checks to Americans with annual incomes below $75,000. To ensure the bill passes in Congress, Trump may tie this refund plan with the Democratic Party's concerns about extending Obamacare subsidies and bypass Senate obstruction by passing a reconciliation bill. This strategy aims to transform the victims (consumers) of the tariff war into beneficiaries, achieving a "win-win" in geopolitics and the domestic economy. This targeted stimulus for the middle and low-income groups, combined with the increase in disposable income from lower oil prices, will benefit retailers serving consumer staples and may reverse the current market consensus on the "K-shaped economy" recovery, where only the wealthy benefit. The end of the international order and the gold bull market The United States' aggressive geopolitical moves to control oil prices have sent a clear signal to the world: the rule-based international order has come to an end. David Woo believes that when the world's most powerful country decides to act based on strength rather than rules, the international system that protected the interests of small countries in the past ceases to exist. This shift has far-reaching implications for asset allocation: Shorting emerging market stocks: In the new order lacking rule protection, small countries face higher geopolitical risks, rendering the traditional "convergence trade" logic ineffective. Long defense sector: Security concerns will compel countries to significantly increase defense spending. Long gold: With the United States no longer serving as the benevolent guarantor of the international order, the credit foundation of the U.S. dollar as a reserve currency is eroded. In the context of expanding deficits and the rise of geopolitical realism, gold will become a key asset to hedge against the disorderly world. Even if the U.S. dollar does not collapse, gold still has the potential for over 10% growth. The biggest risk: stock market and AI bubble Despite Trump's efforts to woo voters through domestic policies, the stock market remains his "Achilles' heel." David Woo warns that the current overvaluation of U.S. stocks is approaching the level of the dot-com bubble period, and capital gains tax is an important source of growth in federal tax revenue. Once the stock market falls by 20-30%, it will not only trigger an economic recession but will also lead to a sharp deterioration in the fiscal deficit. The biggest risk in the market currently lies in the bursting of the AI bubble. Wall Street generally expects capital expenditures related to AI to grow by another 50% in 2026, but the increasingly fierce model competition, hardware bottlenecks, and future return rate issues are making this consensus fragile. If tech giants (such as Microsoft) show any signs of slowing growth in their financial reports and retail investors stop buying on dips, the market may face a drastic adjustment, threatening Trump's reelection plans. This article is republished from "Wall Street See News," author: Xu Chao; GMTEight editor: Huang Xiaodong.