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.
Democrats are pushing for more time with the new DOL rule. The party says that the 30-day comment period on the new DOL rule is insufficient for public comment. They argue that since the new rule is 123 pages itself and relies on thorough knowledge of the SEC’s 770-page Reg BI, 30 days is simply not enough time to fully digest and comment on the rule. In their words, “As the Obama Administration twice respected the requests of those who asked that the fiduciary rule comment periods be extended, we call on this Administration to do the same. At a minimum, we request the DOL provide an additional 60 days so as to give the public a more appropriate amount of time to consider the impact of such a significant proposal and better align this comment period with past precedents.”
FINSUM: Two industry perspectives here. On the one hand, going slow is not necessarily bad—who wants new regulations sooner? On the other, getting the rule done before Trump may leave office would be more beneficial to the industry than a new version that a new Democratic administration might propose.
Those who lean right might not want to consider it, but polls have been showing Biden and the Democrats leading (poll issues being a major issue, but ceteris paribus….). That said, investors have a duty to consider what would happen in the event of a Biden win, or a Democratic sweep. While Democratic wins in the House and presidency are quite plausible at this point, a win in the Senate still looks like a challenge. Let’s consider two scenarios then: a Biden win with a split Congress, and a Democratic sweep. In the first scenario, markets do not worry a whole lot. The Republicans holding onto the Senate would mean many of the left’s more radical proposals would be blocked. What about a Democratic sweep? That could be different, as Democrats could push through anything they wanted. However, even that scenario is looking less dire for investors because Biden is not moving to the left as much as feared. Also, since his priority will be to reopen the economy, sharp increases in taxes seem unlikely in the near term.
FINSUM: It still seems unlikely that Democrats could sweep given the Republican’s 53-47 lead in the Senate. So if Biden wins and the Democrats keep the House, it would probably be an okay (no big moves) scenario for investors.
One interesting investing strategy (admittedly always for a small minority of a portfolio) is to look at the very worst stocks in the market for a contrarian bet. Of all the thousands of publicly traded and analyst-covered stocks, just 90 have no “Buy” ratings from a single analyst. Out of that down and out basket, there are three interesting stocks to consider; shares which could do well if the economic recovery even goes just a little bit right. The stocks are: Sally Beauty Holdings (beauty supplies to consumers and salons), Michaels (the arts and crafts store), and Blackbaud (a software provider to the non-profit space).
FINSUM: Of these, Michaels is moderately interesting because they just brought in a new senior executive from Walmart, which should help improve margins and store performance, which could lead to good multiple expansion.
Markets were up big today on news out of China. The day started with Chinese stocks surging on news from the government—Chinese state media told its people that they should load up on stocks. This sent hopes for a recovery soaring around the global and markets rose strongly. Beyond the state’s endorsement, the Chinese economy does seem to be dong well. “In recent weeks the data has looked very positive from China. Its economy is back in motion, and that should lift global equities a bit”, summarized Principal Global Investors chief strategist, Seema Shah.
FINSUM: The state media announcement seems a bit hollow, but since real economic data in China appears to be improving, the overall direction looks positive.