Displaying items by tag: republicans
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.
Republicans are supposed to debut their new stimulus package today—after a long wait that neither side was happy about—but the details are still unclear. Some prominent party members hinted at details of the proposal on CNN yesterday. So far, it looks like enhanced unemployment benefits will be continued, but at a lower amount, an eviction moratorium would be extended, and direct $1,200 payments may continue for a subset of Americans. Republicans say they want to negotiate a stop-gap deal while a larger package is hashed out. House speaker Pelosi wants the full package negotiated now.
FINSUM: Given the length of time it may take to hash out a complete new deal, millions of Americans would probably be happy if a basic short-term package was agreed ASAP.
On Friday we ran an article covering which sectors and stocks would do well if the Republicans swept the election. Today we are doing the opposite side of that coin—the stocks that will win big if the Democrats sweep. Democrats are currently leading in the presidential poll and seem likely to keep ahold of the House, while the Senate looks like much more of a stretch. That said, if a sweep happens, infrastructure may be a key sector to surge as a large infrastructure bill would seem likely. Other sectors likely to gain are renewable energy, semiconductors, consumer staples, and oddly, gun stocks (since sales will likely surge on fears of regulation).
FINSUM: The infrastructure play seems like a good one, semiconductors also (like Western Digital). We still think a more likely scenario is a split Congress.
Because of how the polls are trending, very few seem to be thinking about the fact that a Republican sweep of all three chambers of the government could happen. When you step away from the polls and think about the fact that Republicans currently control two of the three chambers, it becomes more realistic; and even more so when you consider that polls are likely skewed towards Democrats because of “silent” Republican supporters. If the Republicans sweep, or even just if Trump wins, then the sectors that will surge are energy, banks, healthcare, and defense. In particular, think names like Marathon Petroleum, Bank of America, Pfizer, and Northrop Grumman.
FINSUM: This may be unlikely, but it is not as wildly unrealistic as some make it sound. Perhaps smart to have a portion of the portfolio in these sectors headed into the election?
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.