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2024/10/29

Election Scenarios ➡️ Their Impact on Markets

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EDITOR'S NOTE

The election is only one week away, and our friends at Monument Traders Alliance have an important message.

In today's guest article, Lead Fundamental Tactician Karim Rahemtulla is showing readers which sectors would be most impacted in the event of a Donald Trump win or a Kamala Harris win.

Also, Karim has a special announcement ahead of the 2024 Election. He's opening up the doors to his live trading platform - The War Room - for FREE as part of The War Room's first ever Election Open House.

It's all going down next week: October 4-8.

By signing up, you'll be able to trade alongside Karim and MTA's Lead Trading Tactician Bryan Bottarelli for FREE for five-straight trading days. That's five days' worth of free trade ideas, at no cost to you.

Click here to sign up for FREE to The War Room's first ever Election Open House.

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Election Scenarios and Their Impact on Markets

Karim Rahemtulla, Head Fundamental Tactician, Monument Traders Alliance

Karim Rahemtulla

The 2024 Election is just one week away, and today I'm going over specific sectors to watch depending on who wins.

First, let's start with Republican Presidential Nominee Donald Trump.

If Donald Trump wins the presidency again, the impact on the markets would likely be shaped by his well-established policy preferences.

A Trump win could impact these sectors:

  1. Tax cuts: Trump has consistently favored lower taxes, particularly for corporations and high-income individuals. A return to his tax-cutting agenda would likely boost corporate profits and market sentiment, potentially leading to a surge in stock prices, especially for large-cap companies and sectors like tech, finance, and energy.
  2. Go long on technology, and long speculative stocks and crypto.

  3. Deregulation: Trump's approach to deregulation in industries such as finance, energy, and healthcare could further increase corporate profits by reducing compliance costs. This would likely benefit stocks in those sectors, especially oil and gas companies, banks, and large industrial firms.
  4. Go long on chemical companies.

  5. Trade policy: Trump's protectionist trade policies, including tariffs and a more confrontational stance toward China, could reintroduce uncertainty in global markets. While this may boost domestic manufacturing and certain industries, it could also disrupt global supply chains, impact companies reliant on foreign trade, and lead to volatility in industries like agriculture, tech, and manufacturing.
  6. Go short on China, and long on Mexico and Canada.

  7. Energy: A Trump presidency would likely benefit traditional energy sectors like oil and gas. He has consistently promoted U.S. energy independence and rolled back environmental regulations. Renewable energy stocks might face headwinds under this scenario as policy support could shift away from climate initiatives.
  8. The impact here is neutral since we are already producing record amounts of energy.

  9. Federal spending and infrastructure: Trump has previously supported large infrastructure projects. If he pushes forward with infrastructure investments, it could boost sectors such as construction, materials, and industrials, though this would likely be paired with continued pressure to limit social spending.
  10. Go long on steel and prison stocks.

  11. Interest rates and inflation: Trump has criticized the Federal Reserve for maintaining higher interest rates in the past and may put pressure on the Fed to keep rates low to stimulate growth. This could be bullish for equities in the short term but could also lead to inflationary concerns, affecting bond markets and potentially increasing market volatility.
  12. Go long on the U.S. dollar as interest rates will likely move higher over time but also go long on gold in event of massive deficit spending

  13. Healthcare and pharma: Trump has supported deregulating the healthcare sector and lowering drug prices. While this might benefit consumers, pharmaceutical and healthcare stocks could face pressures from pricing reforms and a more competitive landscape.
  14. It's important to note that the impact here is neutral.

These are the 7 sectors investors should consider if Donald Trump wins.

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Watch these sectors if Kamala Harris wins:

  1. Regulation: Harris has advocated for stronger regulations across various sectors, including technology, healthcare, and energy.
  2. Increased regulatory scrutiny, especially on tech giants and large corporations, could lead to higher volatility and pressure within these sectors.

    Short Bitcoin and go long on unionized industrial stocks.

  3. Taxes: She supports progressive taxation and higher corporate taxes, which may influence corporate earnings and investor sentiment, particularly among high-income individuals and large corporations.
  4. Invest in municipal bonds and avoid business development companies (BDCs).

  5. Green energy: A strong proponent of environmental policies, Harris backs ambitious climate change initiatives and clean energy investments. This could drive growth in renewable energy, electric vehicles, and related infrastructure, while potentially impacting traditional energy sectors like oil and gas negatively.
  6. Go long on solar, natural gas, and electric vehicles.

  7. Healthcare: Harris favors expanding healthcare access, potentially through public options or strengthening the Affordable Care Act.
  8. This could benefit healthcare providers focused on access but may create uncertainty for private insurance companies or pharmaceutical firms, depending on the structure of reforms.

    I recommend shorting healthcare intermediaries.

  9. Trade and foreign policy: Like President Biden, Harris is expected to maintain a multilateral trade approach, enhancing trade relations while maintaining a competitive stance toward China.
  10. This could stabilize certain trade-dependent industries.

    Go long on emerging markets and keep a neutral stance on China.

Bottom line: Overall, a Trump win would likely be viewed as market-friendly in the short term due to his pro-business policies, tax cuts, and deregulation. However, potential trade wars, inflation concerns, and geopolitical uncertainties might create long-term risks and volatility in specific sectors.

However, a Kamala Harris victory could spark initial volatility as investors adjust to perceived risks in sectors aligned with her platform - such as tech regulation, climate change, and social policies.

Yours in smart speculation,

Karim

P.S. And if you want to avoid the fear-based news headlines surrounding the markets and see how the pros are trading the election in real time, I have a special offer for you today.

Starting Monday at 9 a.m. ET, we're opening the doors to our live trading platform - The War Room - for FREE for one whole week.

It's part of our first ever Election Open House, and here you'll have the opportunity to receive FREE live trades for 5 straight trading days.

You'll also receive Bryan and I's post-election livestream where we'll talk about the results and show you how to play the market in response.

This election is going to have huge implications for the markets in the days, weeks and years to come. So don't miss out on this FREE opportunity to see how the pros are trading it.

Click here to get on the guest list.

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