US stocks fell on weak non-farm payrolls data released last Friday. The S&P fell more than 1.7% and was down more than 4% for the week, its biggest weekly drop in a year and a half.
In addition to concerns about a recession, uncertainty surrounding the US election as it enters its final stretch has also weighed on US stocks.
At 9:00 a.m. Beijing time on Wednesday, presidential candidates Trump and Harris will hold their second debate of the 2024 election in Philadelphia. This will also be the first head-to-head confrontation between Harris and Republican presidential candidate Trump on the same stage after she succeeded Biden as the Democratic presidential nominee.
How did the debate go?
According to debate rules, Trump and Harris will have a 90-minute live televised debate at 9 p.m. local time on September 10. There will be no audience on site, and when one side speaks, the other side's microphone will be turned off.
Harris had previously requested that the microphone be left on throughout the debate (to expose Trump's character flaws), and she agreed to the mic-off rule on September 5. The two sides could debate again in October, but no specific arrangements have been made at this time.
The debate topics are expected to be similar to the Trump-Biden debate on June 27, focusing on domestic economic policies, including inflation, corporate and individual taxes, housing, immigration, etc. How Harris, who lacks policy experience, responds will be a big highlight.
What does the market care about most?
Harris and Trump are expected to clash over inflation, tariffs, taxes and other issues during Wednesday's debate, according to media reports.
Trump’s economic policy focuses on imposing tariffs. He has called for a 10% to 20% tax on all foreign goods and a basic tax on all foreign-made goods. Harris, by contrast, favors limited tariffs, continued moderate trade policies, and a “high, small-yard wall” in the technology sector.
Some economists have argued that the tariff hikes would have a “more harmful than beneficial” impact on economic growth and would push up inflation. Analysis by the Peterson Institute for International Economics found that the price increases caused by Trump’s tariffs would increase the Medium American family’s annual expenses by $2,600.
Second, taxes are also a big issue. Both parties use tax cuts as a campaign strategy, but they differ on whether to raise or lower corporate taxes.
Harris supports “Rewarding Work, Not Wealth,” raising the corporate tax rate from 21% to 28% (Trump’s 2017 law reduced it from 35% to 21%), and raising the minimum tax rate; Trump’s tax cuts are more direct and simple (fully extending corporate and individual tax breaks), and plans to cut taxes for businesses.
Additionally, the tax cuts Trump introduced in 2017 expire next year, so the next president will face a decision on whether to extend them.
GF Securities also added that on housing policy, Harris' policy plan is a more extreme approach, advocating a sharp increase in supply while subsidizing demand, while Trump's announcement on housing subsidies is very limited.
On energy policy, Harris hopes to increase the share of clean energy by increasing new energy investment and subsidized projects; while Trump has stated that if he wins the White House again, he will XEM canceling the federal tax credit of up to $7,500 for electricity; vehicles.
In general, Harris is more progressive on domestic economic policies, while Trump is more progressive on foreign economic policies.
The "Trump Deal" vs. the "Harris Deal"
GF Securities pointed out that the difference in policy views between Harris and Trump (such as corporate tax policy and energy policy) on relevant industries under different circumstances is the difference between the “Trump Deal” and the “Trump Deal” in the financial market. The most obvious part of the Harris deal.
Looking specifically at the downstream impact, both policy proposals would carry risks of rising inflation and deficits, while the impact on economic growth remains uncertain. Trump’s trade policies could be negative for non-US assets.
Impact on inflation: Harris’s anti-inflation policy is relatively comprehensive, but there are practical problems in its operation. Stimulating the housing market is particularly fraught with inflationary drivers; Trump’s policy focus is relatively focused, but his policies on trade and immigration will also create uncertainty about inflation.
Impact on government deficits: Both Harris and Trump's policies are geared toward higher deficits, with the former being relatively more manageable.
Impact on economic growth: There is uncertainty about the impact of the two policy proposals on nominal growth, so the market is relatively more sensitive to the actual policy of the US Federal Reserve in terms of aggregate pricing. From a structural perspective, Harris' policies are relatively beneficial to new energy, real estate and mass consumption.
Impact on non-US assets: Trade policy could be a key differentiator and Trump's rise to power could cause short-term concerns about trade conditions.
