Author: RockFlow
Key Points
① Historical data on the S&P 500 index since 1901 shows that the index will rise in the long run, regardless of which party is in power in the White House.
② The market generally believes that given Trump's current stance, he supports policies such as cryptocurrencies, traditional energy, infrastructure construction and tax cuts; while if Harris takes office, she tends to favor welfare policies, healthcare, green energy and growth in U.S. exports, housing support, etc.
③ The U.S. stock market is currently regaining the "Trump trade". For example, Trump's social media company DJT has doubled in price since October; Phunware has accumulated a cumulative increase of over 200% this month; in addition, cryptocurrency concept stocks supported by Trump have collectively rebounded, with Bitcoin rising more than 10% from its intra-month low.
As the Federal Reserve previously announced its first rate cut since 2020, the market's attention is turning to the next major event - the U.S. presidential election on November 5.
However, due to the different policy tendencies of the candidates of the two parties, the emergence of the new president will have an important impact on different sectors of the U.S. stock market.
Recent polls show that Harris and Trump are evenly matched in the presidential election. In the ABC/Ipsos poll, Harris is leading by 4 percentage points, while Trump has a slight edge in other polls. This indicates that Harris' support has declined since the previous New York Times poll in early October.
This is also the reason why Goldman Sachs, JPMorgan, Deutsche Bank have collectively spoken out in recent weeks, and Wall Street is fully betting on the "Trump trade".
1. Trump Trade
Recently, as Harris' lead over Trump in the polls has narrowed, the latest odds in the betting market also show that Trump has overtaken Harris. The market is regaining the "Trump trade".
For example, Trump's social media company DJT has doubled in price since October. Phunware has accumulated a cumulative increase of over 200% this month, and cryptocurrency concept stocks supported by Trump have collectively rebounded, with Bit rising more than 10% from its intra-month low.
The RockFlow research team previously released a Trump stock list, which included the key targets of the "Trump trade", including DJT, the media platform created by Trump, PHUN, which developed campaign activity apps for Trump's team in the 2020 presidential election, RUM, the video platform where Trump supporters gather, defense stocks like Lockheed Martin and Raytheon Technologies (which are expected to benefit from increased military spending if Trump takes office again), CAT (which is expected to benefit from Trump's desired tax cuts and infrastructure policies), Tesla (whose CEO Musk is a loyal supporter of Trump), etc.
In addition, given Trump's political stance and policy tendencies, more pharmaceutical stocks (such as Eli Lilly) and bank stocks (such as Goldman Sachs and JPMorgan) are also expected to benefit if he takes office again.
Specifically, investors can focus on the following four sectors:
1) Trump supports cryptocurrencies, so MSTR, COIN, MARA may benefit
2) Trump supports traditional energy, so BKR, XOM, CVX may benefit
3) Trump plans to relax financial regulation, so JPM, GS, BAC may benefit
4) Trump plans to strengthen infrastructure construction, so CAT may benefit
2. Harris Trade
In contrast to Trump, Kamala Harris emphasizes inclusive economic growth, sustainability and addressing wealth inequality. If Harris takes office, investors need to focus on the following beneficiary sectors:
1) Harris advocates promoting U.S. export growth, so WMT, AMZN may benefit
2) Harris calls for more housing support, so SWK may benefit
3) Harris supports clean energy, so FSLR, ENPH, CSIQ may benefit
With Harris' support, the Biden administration successfully signed the landmark Inflation Reduction Act. Additionally, she has proposed injecting $20 billion into the EPA's greenhouse gas reduction fund to drive the growth of clean energy. She emphasized strict regulation of oil companies and other polluting businesses, having filed lawsuits against multiple fossil fuel companies, including one against a pipeline company over an oil spill, and investigating ExxonMobil's potential misinformation on climate change. Harris' stance on promoting clean energy may be more proactive than Biden's. 4) Harris supports marijuana legalization, which could benefit TLRY and CGC. The Democratic Party is working to legalize marijuana at the federal level, and Harris also supports this. In a previous vice presidential debate, she stated that the Biden-Harris administration is committed to "legalizing marijuana and expunging the records of those convicted of marijuana-related offenses." Harris has also openly criticized the current marijuana restriction policies as "irrational" and called for the Drug Enforcement Administration (DEA) to reclassify marijuana. Therefore, if Harris is elected, the cannabis industry could be one of the major beneficiaries. 3. Conclusion The RockFlow research team believes that the upcoming U.S. presidential election will bring new investment opportunities to the U.S. stock market. If you are optimistic about Trump's election, you can focus on the opportunities in the cryptocurrency, traditional energy, and infrastructure construction industries; if you believe that Harris will ultimately win, you can invest in healthcare, green energy, and housing support-related concept companies. The "Trump trade" and "Harris trade" involved targets will continue to be the focus of discussion in the next 2 weeks. Only by deeply understanding the policy strategies of the two candidates and the impact of their different preferences can investors effectively avoid investment risks and seize market opportunities.
