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How to Invest in This Fragile Election Year

But under these circumstances, if there is a Trump victory: expect more and higher tariffs, which could be trade disruptive and inflationary, hurting “the consumer discretionary, industrial and information technology sectors,” in the eyes of UBS, the financial services industry. company. Mr Trump would likely succeed in cutting taxes and widening the budget deficit, which would stimulate the economy but also increase inflation – which could lead to higher interest rates. There will likely be less regulation, which will benefit sectors such as fossil energy and financial services.

If Biden is re-elected but Democrats do not control Congress, the status quo will remain. Expect more regulation (although the Supreme Court on Friday limited the executive branch’s regulatory powers) and higher taxes on wealthy people and corporations than under Mr. Trump, along with executive orders to support “businesses in the industrial, materials, and utility sectors that are focus on renewable energy sources and energy efficiency,” said UBS.

A landslide that gives control of both the White House and Congress to both parties would be unexpected and could disrupt markets. Biden could achieve legislative achievements that were out of reach. The likelihood of tax increases for the rich and for companies increases. The likelihood of positive outcomes for clean energy companies increases, while banks and fossil fuel companies will have a harder time, so goes the Wall Street thinking.

A Trump landslide would be the most worrying outcome from a purely financial perspective, because he could impose policies that could radically change the way business is done and life is led in the United States. The New York Times reports on the plans for a second Trump administration. I won’t go into details here.

Neither a Trump landslide – nor a Democratic one – is ‘priced into markets’ Anthony Saglimbenechief market strategist at Ameriprise Financial, in a briefing for reporters. “If we wake up on November 6 and it looks like we have Congress under control, I would expect volatility to increase.” But, he added, markets are likely to recover quickly. History, Mr. Saglimbene said, shows that the market will refocus on interest rates and corporate earnings “once the election cycle is over.”

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