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Presidential Candidates: What to Expect
In this edition of the Entryway, we thought we would do something a little different and talk about the two presidential candidates and how each may affect particular sectors of the market. Regardless of political stance, we believe it would be beneficial for our readers to understand how each candidate’s policies may impact particular areas of the economy and what that could mean for your investments.
In general, markets like predictability because of the clarity it provides to business owners and – ultimately – to investors. Whether you run a small business or are the CEO of a Fortune 500 company, business owners need predictability in the marketplace to know how to budget, how to forecast and what kind of investments to make in their business.
With that in mind, let’s break down some of the sectors of our economy and how the candidates’ policies may impact those areas:
Health care
- Clinton: Biotech stocks, which already have felt some pressure from Clinton’s proposal to rein in drug costs, would likely continue to face some headwinds if she is elected. However, a Clinton victory likely means that the Affordable Care Act will stay in place, which could benefit managed-care and hospital stocks.
- Trump: If Trump wins, biotech stocks and other drug stocks may get a “relief rally,” as Trump has stated his opposition to any further regulation on drug pricing. However, if Trump wins, hospitals and managed-care facilities may face some pressure as he attempts to unwind the Affordable Care Act.
Financial services
- Clinton: As we know, Clinton has been outspoken about wanting to “rein-in” Wall Street and the banks that are “too big to fail.” This means large banks and brokerage houses could feel increased pressure from a Clinton plan that would likely keep Dodd-Frank (which was enacted after the 2008 financial crisis to put higher restrictions on financial institutions). She would likely push to expand the restrictions under her watch.
- Trump: On the flip side, Trump has said he wants to eliminate Dodd-Frank to unlock growth and reduce the number of restrictions on big financial institutions. This could be a huge tailwind for large banks and brokerage houses.
Energy
- Clinton: Clinton’s plans call for more investment in alternative and other clean-energy sources. Therefore, alternatives like solar, wind and other renewable energy sources would likely benefit from her “Clean Energy Challenge.” Additionally, the big oil companies may feel pressure if she enacts legislation giving tax incentives to alternative energy sources and penalizing fossil-fuel companies.
- Trump: If Trump is elected, he has promised to fast track the Keystone XL Pipeline, which would be a boon for Big Oil. He has also promised to decrease regulations and lift moratoriums on energy production in current federal areas. In turn, this could be a huge benefit for exploration and production companies in the United States.
Defense
- Clinton and Trump: Regardless of who is victorious in November, it is likely that defense contractors will get a boost in business, as both candidates feel we need to increase our current military spending. In fact, Hillary Clinton has collected more money than any other presidential candidate from employees of the defense industry. However, many believe that Trump’s military spending policy would exceed Clinton’s.
In general, the commonly held belief is that Hillary Clinton would be better for the markets in the immediate days after the election because she has the more “predictable” policies.
But what if Trump wins? Markets are likely to be more volatile at first because of his perceived reputation of “shooting from the hip.” Remember, markets and companies do not like uncertainty. On the positive side, there might be an increased likelihood of a profit repatriation holiday for U.S. companies, which are holding some $2 trillion in cash overseas.
In short, investors need to be aware that regardless of who wins the election in November, it is important to speak with a financial advisor to understand how the future president’s policies could shape our economy over the next several years and how they may affect your portfolio.
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Disclaimer
This communication and its content are for informational and educational purposes only and should not be used as the basis for any investment decision. The information contained herein is based on publicly available sources believed to be reliable but not a representation, expressed or implied, as to its accuracy, completeness or correctness.
No information available through this communication is intended or should be construed as any advice, recommendation or endorsement from us as to any legal, tax, investment or other matters, nor shall be considered a solicitation or offer to buy or sell any security, future, option or other financial instrument or to offer or provide any investment advice or service to any person in any jurisdiction. Nothing contained in this communication constitutes investment advice or offers any opinion with respect to the suitability of any security, and has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient.
This email represents the opinion of Red Door Wealth Management and is for informational purposes only. It is not a recommendation nor is it intended to be construed as tax or legal advice by the recipient. Past review of investments are no guarantee of future results.
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