MoneyTalks: How the US election has changed the game for football legend turned fundie Chris Judd

MoneyTalks is Stockhead’s regular drill down into what stocks investors are looking at right now. We tap our extensive list of experts to hear what’s hot, their top picks, and what they’re looking out for.

Today we hear from Cerutty Macro Fund’s Chris Judd.

Known for his dual Brownlow Medal wins and sterling career as one of the AFL’s greatest names, Chris Judd’s performance in the world of finance is beginning to transcend the premiership-winning form of his playing days.

Starting out as an analyst for venture capital, Judd’s now over 150 episodes deep on Talk Ya Book, a video podcast tapping the knowledge of Australia and beyond’s most notable fundies and business thinkers, and closing in on 18 months managing the Cerutty Macro Fund.

A long-only equities portfolio targeting 15-40 stocks named after the free-thinking Percy Cerutty – iconoclastic and eccentric coach of Aussie track legend and later business leader Herb Elliott – its raison d’etre is to find micro and small-cap Aussie equities and larger global names with upside based on the fund’s analysis of the macroeconomic picture.

Since its inception, Cerutty has delivered solid performance – adding 19.23% on an annualised basis since its launch and 29.17% over the year to October 31, despite a dip in the final month of that period.

That compares to 12.03% and 26.65% for its benchmark, the ASX small ords accumulation index.

But the US election and the looming return of Donald Trump to the White House with an all Republican-controlled legislature are the game changers at front of mind for Judd.

And the early days post-election have given Judd and the Cerutty team reason to see his coming second term in a different light, seeing ongoing strength in the US dollar as a result.

“We initially thought the US dollar would drop more under Trump because we thought his deficits were going to be bigger,” Judd told Stockhead.

“But for a number of reasons we’ve altered that view and we think the US is going to suck in a lot of capital now as they get rid of deregulation and reduce tax rates.

“And we think internally in the US, you could see a real boom.

“The US dollar has already been strong for a long time, so plenty of people are calling for it to roll over, but we’ve adjusted that view.”

Fundies like Chris Judd are trying to cut through the confusion around the market impact of Donald Trump’s election. Pic: Getty Images

Tariffs and taxes

The two key Trump policies Judd is watching closely are income tax cuts, which economists think will spur a ramp up in consumer spending over 2026 and 2027, as well as radical tariffs placed not just on products out of China, but also friendly nations like Canada and Mexico.

“The tax cuts are probably the most important thing and we think it will pass in the first 100 days,” Judd said.

“We think they have a big impact on the consumer, particularly a lot of those tax cuts are around people that don’t have a huge amount of income, removing tax on tips (for example).

“These types of people generally spend a larger portion of what they earn, as opposed to high income earners … who are already consuming the vast majority of what they need.”

Judd thinks that could be positive for payment and gambling stocks exposed to the US market like gaming company Light & Wonder (ASX:LNW), Afterpay owner Block Inc (ASX:SQ2), which Cerutty doesn’t hold, and Paypal (NASDAQ:PYPL), which it does.

The tariffs, on the other hand, could be “more bark than bite” compared to the tax cuts.

Judd says Trump could be wielding them as a stick in negotiations with trading partners.

“We think the tariffs will be implemented gradually and used as a tool for behavioural change that Trump wants to see with other countries,” he said.

That means they won’t necessarily be the inflationary fuel from the moment of Trump’s inauguration, as some commentators fear.

“We’ll wait and see, but we think they’re more a bargaining tool for him to see a response from different governments around the world.”

The fallout for commodities

Trump’s return to the Oval Office will also bring with it a pro-development mindset, with deregulation and a thinning of the Capitol Hill bureaucracy high on the agenda.

Judd thinks that could be less bullish for commodity prices, which thrive when metals and energy fuels are in short supply.

“One of the reasons we were bullish commodity prices was because of all the red tape surrounding commodity producers as they tried to pull stuff out of the ground, as well as the ESG movement which had gone from being seemingly about the environment and it just kept scaling up until it took on more of a religious fervour,” he said.

“We think that’s going to be really reduced.”

Cerutty’s team also sees a high likelihood of an end to the conflict in Ukraine.

Ukraine and Russia are both major mining, energy and agricultural producers.

But outside of the US, a right-wing wave is on the horizon across major South American copper, lithium and iron ore producing countries following the success last year of free-market firebrand Javier Milei in Argentina.

“There’s a couple of right-wing leaders in those countries that are very much pro-business, pro the economy and anti-regulation, much like Milei has been, much like Trump’s promising to be in his second term,” Judd said.

“And so that’s great for the supply of commodities, but we think it’s potentially a headwind to the price of commodities, copper and lithium producers in particular.”

The other side of the equation for commodities is Chinese demand. There could be issues there for bulks.

“We think that China will stimulate their economy, but we think that stimulus will be pushed towards increasing internal consumption in China,” Judd said.

“We don’t think it’s going to be built around building more apartment blocks and they’re already producing so many manufactured goods to be exported.

“We’re not sure if that’s where the attention is going to go, either. We think the main thing China needs is to start increasing consumption domestically.

“We think that’s where the stimulus will be pushed towards, which is certainly less commodity intensive, particularly around bulks.”

Stocks to watch

One of Cerutty’s top picks is AML3D (ASX:AL3), which recently raised $30 million to expand its operations in the United States, where it produces and supplies the Arcemy system, a 3D metal printing process, to US Navy contractors.

$12m of that will be used to double the scale of its technology centre in Ohio, where it produces Arcemy manufacturing systems as well as undertakes contract manufacturing, alloy testing and prototyping contracts.

It stands to benefit from the Trump administration’s motivation to build up domestic manufacturing capacity.

“AL3 is an additive manufacturing business that’s already got a chunk of contracts with the US Navy and Department of Defense and there are some huge navy contracts coming up,” Judd said.

“They’re well funded and may be a beneficiary of the US wanting to build out its manufacturing capacity.”

And the automated nature of its manufacturing processes means it is less likely to be negatively impacted by the potential removal of low cost labour implied by the proposed deportation of 11 million undocumented migrants.

“The productivity from these additive manufacturing machines is significant,” Judd said.

“We could see a world where the US, using more innovation, can build out that manufacturing capacity whilst not flooding their country with new available low-cost labour.”

Looking to Australia’s own defence industry spending, Judd says contractor Civmec (ASX:CVL) is positioning itself to benefit.

“It is looking at completing a JV with Austal (ASX:ASB) and some of the navy contracts and shipbuilding contracts available in Australia for the submarine program are going to be really significant,” he said.

“We think some of those companies could play into that thematic of increased defence spending, which we think is going to continue to be really strong even though we don’t think the war between Russia and Ukraine can continue for an extended period.

“We still think defence spending in the US, particularly in Europe, but (also) other countries around the world is going continue to be heightened.”

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead.

Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.