US Stocks: Four Scenarios Surrounding Presidential and Congressional Elections
2024-09-13
■ If the majority parties in the House and Senate are different, the feasibility of fiscal policy may decrease.
■ At the same time as the presidential election, the direction of the congressional election cannot be ignored.
The following four scenarios can be anticipated based on the combination of the political party to which the US President belongs and the majority party in both houses of Congress. Although policies related to trade (tariffs), immigration, regulations, etc., can be promoted by the president through executive orders and are highly likely to be implemented, fiscal policies require approval from Congress. If the majority parties in the House and Senate are different, the feasibility of the policy is expected to decrease.
(1) The Senate and House of Representatives are controlled by the Republican Party and the situation of President Trump's re-election ("triple red"). Expectations include inflationary pressures caused by tariffs on a wide range of imported goods, mainly from China, as well as a decrease in consumption and wage increases due to strengthened border management and mandatory repatriation of illegal immigrants, which may harm the US economy. On the other hand, bold deregulation in areas such as finance and energy and tax cuts for the wealthy and businesses are expected to drive business performance growth and bring positive news to the stock markets of related industries. (2) The majority parties in the House and Senate are different, and Trump continues to govern. Weakened expectations of tax cuts, tariff increases, and strengthened immigration policies may pose short-term pressure on the stock market.
(3) The Democratic Party controls the Senate and House of Representatives, and Harris is elected as the President (the "Triple Blue"). It is expected that there will not be significant changes in certain cutting-edge technology import restrictions on China, steel, and aluminum product import restrictions, and strengthened border management (legal immigration expansion policies will be promoted). Continue to invest in renewable energy. In terms of the tax system, the plan is to boost the middle class and invigorate the economy by increasing corporate tax and income tax on the wealthy and reducing the tax burden on working-class and parenting families. However, the potential negative impact of increasing taxes may become apparent and become a resistance to stock prices. (4) Harris was elected president due to differences in the majority political parties in the House and Senate. The possibility of increasing corporate tax and income tax for the wealthy has decreased, and investor confidence is expected to improve.
Many viewpoints believed that Harris had an advantage during the televised presidential candidate debate at 21:00 Eastern Time on the 10th (10:00 Beijing Time on the 11th). According to data from Polymarket, the two candidates have a similar winning rate after the debate, with the upper house expected to be controlled by the Republican Party and the lower house expected to be controlled by the Democratic Party. As we approach election day (November 5th), the movements of the presidential and congressional elections become increasingly crucial and cannot be ignored.
■ At the same time as the presidential election, the direction of the congressional election cannot be ignored.
The following four scenarios can be anticipated based on the combination of the political party to which the US President belongs and the majority party in both houses of Congress. Although policies related to trade (tariffs), immigration, regulations, etc., can be promoted by the president through executive orders and are highly likely to be implemented, fiscal policies require approval from Congress. If the majority parties in the House and Senate are different, the feasibility of the policy is expected to decrease.
(1) The Senate and House of Representatives are controlled by the Republican Party and the situation of President Trump's re-election ("triple red"). Expectations include inflationary pressures caused by tariffs on a wide range of imported goods, mainly from China, as well as a decrease in consumption and wage increases due to strengthened border management and mandatory repatriation of illegal immigrants, which may harm the US economy. On the other hand, bold deregulation in areas such as finance and energy and tax cuts for the wealthy and businesses are expected to drive business performance growth and bring positive news to the stock markets of related industries. (2) The majority parties in the House and Senate are different, and Trump continues to govern. Weakened expectations of tax cuts, tariff increases, and strengthened immigration policies may pose short-term pressure on the stock market.
(3) The Democratic Party controls the Senate and House of Representatives, and Harris is elected as the President (the "Triple Blue"). It is expected that there will not be significant changes in certain cutting-edge technology import restrictions on China, steel, and aluminum product import restrictions, and strengthened border management (legal immigration expansion policies will be promoted). Continue to invest in renewable energy. In terms of the tax system, the plan is to boost the middle class and invigorate the economy by increasing corporate tax and income tax on the wealthy and reducing the tax burden on working-class and parenting families. However, the potential negative impact of increasing taxes may become apparent and become a resistance to stock prices. (4) Harris was elected president due to differences in the majority political parties in the House and Senate. The possibility of increasing corporate tax and income tax for the wealthy has decreased, and investor confidence is expected to improve.
Many viewpoints believed that Harris had an advantage during the televised presidential candidate debate at 21:00 Eastern Time on the 10th (10:00 Beijing Time on the 11th). According to data from Polymarket, the two candidates have a similar winning rate after the debate, with the upper house expected to be controlled by the Republican Party and the lower house expected to be controlled by the Democratic Party. As we approach election day (November 5th), the movements of the presidential and congressional elections become increasingly crucial and cannot be ignored.