Displaying items by tag: Trump

(New York)

Goldman Sachs is stressed about the election. In particular, they are concerned about what a contested outcome could mean for stock prices. Because of that, they think the debates which started this week have the potential to be an “important catalyst for investors to assess risks”. The debates have the possibility of swinging the election strongly one way or the other, which means they can be tipping points for investors. “One way to lower the odds of a contested outcome (that brings noise and volatility) is via a large margin of victory that cannot be undermined”. That said, according to the bank’s strategists, even a big win could have risks: “Although undoubtedly under the clean-sweep scenario there is the negative implications for risk assets to be considered, stemming from a Democratic legislative agenda including higher corporate taxes and increased capital-gains taxes”.

FINSUM: Goldman is making it abundantly clear that they think most paths for the market lead lower—likely until the end of the year. With Trump now having COVID, that makes uncertainty even higher.

(Washington)

Many articles have been written about which stocks and sectors will do well or poorly if Trump or Biden wins/loses. Generally speaking, these articles are useful but repetitive. A more interesting idea is to look at the sectors/assets that will do well no matter who wins. With that in mind, here are a few ETFs poised to thrive when either candidate emerges victorious. One surprising area that should prosper in either scenario is clean energy. Biden plans to invest heavily in the area, but even if he does not win, this group of companies have finally become profitable. Couple that with rising pro-green public sentiment, and their long-term outlook is positive. Another area is infrastructure stocks. Both Biden and Trump have big infrastructure spending plans in their agenda ($1.3 tn vs $1 tn), so that appears to be a win-win.

FINSUM: Just as there are winners in either situation, there are also losers. Pharma, for instance, would be under attack in either presidency.

(Washington)

A lot of investors are worried about what will happen to stocks if Biden wins, and even more worryingly, if the Democrats sweep the election. The general fear is that without at least a Republican Senate, the Democrats could give in to their more leftist impulses and create policies which would be detrimental to the financial-economic paradigm. However, UBS argues that even if Biden hikes corporate taxes up to his planned 28%, he will offset that with big economic spending to accelerate the recovery, which should more than make up for the loss of profits because of taxes.

FINSUM: This makes pretty good sense. Even if taxes are raised, it is not like the Democrats are planning to balance the budget. Large amounts of deficit spending will likely help keep stocks afloat.

(Washington)

There are just under 100 days left until the election and there is a lot on the line for markets. The economic approaches of the Trump administration and the potential incoming Democrats could not be more different, which means there are huge implications for stocks. Here is the good news—over the last 40 years, markets have historically risen leading up to the election, and volatility has usually decreased. Now the big possible twist is the COVID pandemic, a major factor that has not occurred during an election cycle. The most comparable election cycle seems to be 1968, when the US was going through similar levels of social unrest. The S&P 500 gained more than 3% in the run up to that election.

FINSUM: As we see it, the two big risks are COVID (and its economic consequences), and a leftward move by Biden. The Fed will certainly soften the blow of the former, while the latter remains.

(Washington)

No matter which side of the aisle you are on, the last several weeks have not been great for the president’s reelection chances. While there are certainly a large portion of “silent” Trump supporters who will vote for him in November, the trends in the polls are not looking good. In particular, Trump seems to be losing ground in what is emerging as the biggest battleground of all—Florida. In 13 of the last 14 elections, the candidate who won Florida won the election. Based on how other key states are heading—Michigan, Ohio, Pennsylvania, Wisconsin—it seems like Trump must win Florida to take the election. One Republican strategist in Florida said the trends in the state were not good, concluding that “Obviously the triple whammy of the virus, the pandemic-induced weak economy and the social unrest have taken a toll on President Trump’s poll numbers”.

FINSUM: Trump has strong support in much of the Latino community, which should help him. But his polls numbers for the state’s key 65+ population have been weak, seemingly as a result of the virus, which is working against him.