Key Points
① Historical data on the performance of the S&P 500 index since 1901 shows that the index will rise in the long run, regardless of which party controls 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 is inclined towards 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 gain 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.
The chart below shows the trend of the S&P 500 index in the U.S. stock market since 1901, with red representing the Republican administration and blue representing the Democratic administration. Historical data shows that the index will rise in the long run, regardless of which party controls the White House.
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 neck and neck 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".
JPMorgan's report on the 17th said that hedge fund capital flows have shown a strong preference for Republican-themed stocks, while renewable energy, a clear representative of a Democratic victory, has been heavily sold off in the past few weeks.
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 is inclined towards welfare policies, healthcare, green energy and growth in U.S. exports, housing support, etc.
RockFlow has carefully analyzed the different positions of the two and their impact on related sectors, and listed the relevant concept companies and targets, to help everyone find more investment opportunities from this important event.
1. The 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 surpassed 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 gain of over 200% this month, and in addition, 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 recorded the key targets of the "Trump trade", including DJT, the media platform founded 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, related defense stocks 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, there are more pharmaceutical stocks (such as Eli Lilly) and bank stocks (such as Goldman Sachs and JPMorgan Chase) that are 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
Trump once attended the Bitcoin 2024 conference and expressed his views on cryptocurrencies. He claimed that if he returns to the White House, he will strive to make the U.S. the world's "cryptocurrency center" and "Bitcoin superpower". He guaranteed that under his administration, he will promote the mining and popularization of Bitcoin to ensure the U.S. maintains a leading position in the global cryptocurrency industry. Trump also announced that the federal government will retain all of its Bitcoin holdings, about 210,000, accounting for 1% of the total Bitcoin supply, making the U.S. the first country to incorporate Bitcoin into its national strategic reserves, endowing Bitcoin with a strategic value similar to gold.
2) Trump supports traditional energy, so BKR, XOM, CVX may benefit
This year, the Republican Party has released a new policy platform: in terms of energy policy, its stance has shifted from "supporting the development of all tradable energy sources without subsidies" to "comprehensively increasing energy production, simplifying approval processes, eliminating improper restrictions on oil, natural gas and coal markets, and achieving energy self-sufficiency; opposing green policies, and abolishing electric vehicle subsidies". The Republican Party led by Trump has higher requirements for energy independence, and its support for traditional energy and suppression of new energy are more obvious.
3) Trump supports relaxing financial regulation, so JPM, GS, BAC may benefit
Trump's attitude towards the regulation of financial institutions, especially banks, is inclined towards loosening restrictions and reducing requirements on indicators such as capital and capital adequacy ratios. He believes that relaxing financial regulation can release the capital stock in the banking system, thereby promoting banks to increase lending. In addition, Trump's proposed tax reform policy is also conducive to improving the profitability of financial companies.
4) Trump plans to strengthen infrastructure construction, so CAT may benefit
The infrastructure construction plan advocated by the Trump administration is also a focus of market attention. The goal of the plan is to comprehensively upgrade and transform U.S. infrastructure through large-scale public and private capital investment. He advocates increasing investment in infrastructure, which is expected to bring benefits to industries closely related to infrastructure construction, including transportation, construction, communications and material supply.
2. The Harris Trade
In contrast to Trump, Kamala Harris emphasizes inclusive economic growth, sustainability and solving the problem of 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
Harris' stance on tariffs is more moderate and friendly than Trump's. She believes that Trump's tariff policy will lead to increased consumer spending on gasoline and daily groceries, thereby putting pressure on the economic situation of middle-class families. She advocates promoting U.S. export growth. This attitude may have a positive impact on global trade, especially for large U.S. multinational companies with extensive global operations and overseas revenue.
2) Harris calls for more housing support, so SWK may benefit
Based on previous reports, Harris has called for the construction of 3 million new homes over the next four years to address the problem of insufficient supply and rapidly rising house prices, while also planning to cancel the tax benefits for Wall Street financial institutions to purchase homes. On the demand side, Harris plans to provide higher down payment assistance and tax credits for first-time homebuyers to stimulate the market. These measures have a positive impact on residential construction suppliers.
3) Harris supports clean energy, so FSLR, ENPH, CSIQ may benefit
Harris has a strong focus on promoting clean energy and addressing climate change. She plans to invest heavily in renewable energy infrastructure, electric vehicles and other green technologies. This is expected to benefit companies in the solar, wind and other clean energy sectors.
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 previously sued multiple fossil fuel companies, including a pipeline company over an oil spill, and investigated ExxonMobil for potentially misleading the public on climate change. Harris may be more proactive than Biden in promoting clean energy.
4) Harris supports marijuana legalization, which may 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 "unreasonable" and called for the DEA to reclassify marijuana. Therefore, if Harris is elected, the cannabis industry may 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 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 targets involved in the "Trump trade" and "Harris trade" will continue to be a hot topic in the next 2 weeks. Investors can effectively avoid investment risks and seize market opportunities only by deeply understanding the policy strategies of the two candidates and the impacts of their different preferences.
