Financial advisors are a conservative bunch, so we know that there has been some very anxious feelings over the last couple of weeks as would-be Democrat presidents have announced their intentions for big tax hikes. How about 70% top tax rates and major wealth taxes? Some, like Bernie Sanders and Chuck Schumer, have also recently posed putting restrictions on buybacks. With all this in mind, here is a list of stocks that would be most in trouble from the Democrat plans that are currently on the table. According to Barron’s, the most at risk are Citigroup, Whirlpool, American Airlines, Union Pacific, and Boeing, but Walmart and Harley-Davidson could also be exposed.
FINSUM: This list was rather simply done—the companies that had reduced headcount the most and also bought back shares. However, as we move towards the election, it is time to start considering the risks to different stocks.
This Barron’s article argues that while he is officially a Republican President-elect, Donald Trump has some tendencies that make him look a lot more like a Democrat. Trump does have some big sticking points with the left, especially regarding the Supreme Court and immigration, but the piece summarizes all the areas of consensus, including “opposition to NAFTA and other trade deals; strong support for infrastructure spending; hiking the minimum wage; indifference to entitlement reform; punishing firms that leave the U.S. The Democrats may have an easier time achieving their goals on those issues than if Hillary Clinton had won”. And beyond just policy, Trump is now “making nice” with Senate Majority Leader Chuck Schumer, a very odd combination for a hard-line Republican.
FINSUM: One of Obama’s biggest weaknesses was that he could almost never co-opt Republican support on any measure, which led to gridlock in Washington. We think Trump may be a good enough “dealmaker” to overcome that.
Diehard FINSUM readers may have noticed that we have not commented much on the US presidential race. However, now that Super Tuesday has occurred, we thought it time to start our coverage, as it is from this point that we think the race might have an impact on markets. Yesterday proved unclear on the Republican side, with Trump performing as most expected, but not pulling far enough ahead of Cruz to close things out, ensuring the race will continue. Clinton had a clear victory over Sanders on the Democratic side, and made a comeback for Sanders more difficult. On the whole, Super Tuesday did little to clear up who will be the Republican candidate for president.
FINSUM: Here is our view on the election as it concerns markets. Clinton is the candidate of least impact, as she seems to mostly represent the status quo, and will create little anxiety amongst investors. Sanders, Trump, and Cruz, will make markets nervous, with the relative levels matching the order of the names listed, in our opinion. Any news about the success of these three in the coming weeks/months will likely start to make more of an impact to market prices.