This month, Jason Weaver covers election history, socially charged elections and election investment implications.
ELECTION HISTORY
History strongly favors the incumbent going back to 1932. An incumbent president has never failed to win re-election unless a recession has occurred during their time in office. The S&P 500 volatility has typically been higher in election years as markets frequently reprice the probability of future policies. The market has generally shown resilience regardless of which party occupies the White House.
SOCIALLY CHARGED ELECTIONS
During the 1948 election (Truman vs Dewey) the social topics were military segregation and women’s rights. Dewey had the popular vote, but Truman won. During the 1968 election (Nixon vs Humphrey) the social topics were the Vietnam War, Civil Rights Movement, and many protests tied to both. Humphrey has the popular vote, but Nixon ended up winning. Something to keep in mind is that the elected president is just one factor to consider and the control of the Senate is key to bringing about real changes in policies.
ELECTION INVESTMENT IMPLICATIONS
With political issues, there’s typically not a broad market set of considerations and tends to be more sector focused.
Healthcare
Biden Win: Tougher stance on drug prices that would pressure healthcare. Future Uncertainty
Trump Win: Renewed emphasis on Further weakening ACA. Alleviate risk on broad healthcare
Technology
Biden Win: Reprieve of punitive tariffs could positive for tech most impacted by tariffs
Trump Win: Regulatory action could intensify in his second term. Antitrust concerns could become a headline risk for tech firms
Energy
Biden Win: Infrastructure plan seeking carbon neutrality in energy sector. Shift towards electric vehicles. Environmental regulations.
Trump Win: More traditional infrastructure spending (airport, highway, bridges, etc). Looser environmental policies
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