Displaying items by tag: election
The election may still be ten months away, but the whole year is likely to be framed by it, markets being no exception. With that in mind, Morgan Stanley has some advice for investors. The first thought they offer is that in this case, being reactive is probably better than being proactive. If you reflect on 2016, everyone thought that a Trump victory would hurt stocks. The exact opposite happened. In this case, don’t assume a Democrat victory would be bad. Accordingly, it may be wise to wait until the election and then allocate as seems fit at that time. The other thing to bear in mind is that a Democratic sweep could be surprisingly good for stocks. According to Morgan Stanley, ““We would expect that a Democratic sweep in 2020 could deliver the greatest impulse to the economy” because of its greater odds of bringing a fiscal stimulus than when the government is divided between parties.
FINSUM: We really like this line of reasoning from MS.
There is a currently a great deal of anxiety over the election. It is not just political either—a Democrat or Republican win would create drastically different economic environments, which will lead to very different returns. One prominent hedge fund manager commented on the whole situation, saying “I think we all wish that we could kind of go back to thinking about investing without political risks”. Despite this longing, it is clear that we will not go back to that era anytime soon. Accordingly, check out these stocks, which should thrive no matter if Trump or a far-left Democrat wins the bid. Healthcare and tech look like big risks, but interestingly, large oil companies may be a good bet. If Warren wins and bans fracking, oil prices are likely to rise, helping large integrated oil companies. Another approach is to focus on stocks that will benefit from government plans that are already happening, such as those related to state infrastructure spending, legalized sports gambling, and shipping fuel standards.
FINSUM: We are still a year out from the election, but it is certainly worth thinking about how to position the portfolio, as polls leading up to the big day will move markets a lot.
Bernie Sanders is struggling to keep his positon as the third most popular candidate in the Democratic primary. Elizabeth Warren seems to have taken a lot of his platform and delivered it more succinctly and less cantankerously. However, Sanders is trying to one-up her and has just announced his own wealth tax plans. Bernie goes further than Warren with a tax that aims to cut net worth of America’s richest by half in the next decade. Sanders further commented on his plan, saying “billionaires should not exist”.
FINSUM: Whatever you think of this plan, we don’t believe this is ultimately going to help Bernie or the Democrats win the general election, as this is likely just too radical for most Americans.
Elizabeth Warren is currently the only candidate that is really rising in the polls, and that is terrifying Wall Street. The far-left candidate has the most comprehensive plans to change the status quo of the financial system and she is gaining traction with voters. That is making Wall Street very nervous. Famed investor Leon Cooperman said he expected a year-plus long bear market with losses of 25% or more if either Sanders or Warren wins the election. Biden currently still leads Warren, but the gap is close, with his advantage down to 31% to 25% of Democratic voters.
FINSUM: Our own feeling on this is that Warren may have the momentum to win the bid, but that it will likely prove quite hard for her to win the general election, as her policies are very progressive for middle-of-the-road voters.
Whichever side of the political aisle you are on, the new polls coming out about the 2020 presidential election look misleading. A new Gallup poll released this week showed that Biden has a 54% to 38% lead over Trump. Furthermore, the poll found that any of the 5 top Democratic contenders would beat Trump in the election were they to win the bid. Additionally, 37% of voters reported that they felt the economy was worsening versus 31% who said it was improving, the first time recently that Americans have been pessimistic about the economic outlook.
FINSUM: The polls don’t seem to be doing justice to how close this election feels. They just don’t reconcile for us. That said, the numbers on economic sentiment are quite interesting.