Trump vs. Harris: Market Shockwaves from Dueling Economic Doctrines
As the 2024 election barrels toward its conclusion, financial markets are girding for major disruptions based on the starkly divergent economic philosophies of President Donald Trump and Vice President Kamala Harris. While their rhetoric leans ideological, the real-world policy impacts promise to create serious reverberations across asset classes no matter who wins.
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Under a second Trump term, the pro-business trajectory of tax cuts, deregulation and an "America First" trade posture would likely extend recent market dynamics:
Propelling Profits, Fueling Stock Buybacks
Maintaining the 2017 corporate tax cuts incentivizes stock buybacks that have bolstered equity prices. Sectors benefiting could include energy from Trump's fossil fuel embrace, manufacturing from tariff protections, and financials from lighter regulation. However, a fresh tech trustbusting salvo would hit FAANG giants.
Holding Down Bond Yields
Trump's Fed appointments backed by anti-deficit hawks aim to contain inflationary pressures, tamping down bond yields. Corporate debt issuance should stay inexpensive, though rising deficits risk spooking bond vigilantes.
Boosting Hard Commodity Prices
The "energy dominance" policy expanding drilling permits and infrastructure projects should keep stoking prices for oil, gas and industrial metals. Migrant labor restrictions may spur agricultural automation investments.
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Juicing Commercial Real Estate
Favorable business tax policies sustain momentum for hotel, office and retail property investments. But labor shortages could stall residential construction if Trump's immigration curbs are extended.
In contrast, Harris would upend these economic currents with her proposed sweeping overhaul:
Taxing Corporations and Buybacks, Picking Winners & Losers
Raising the corporate rate to 28% and quadrupling the tax on buybacks could hammer share prices – especially for tech and fossil fuel firms. Clean energy, biotech and ESG "stakeholder" investments gain favor.
Fueling Bond Rout
Multi-trillion dollar spending on climate and social programs risks unleashing inflationary pressures. Spiking yields could ripple across debt markets globally as the Fed is forced to hike rates.
Hastening Renewable, Battery Metal Demand
Harris's clean energy transition may crush oil/gas stocks while kickstarting a bull market in strategic minerals used in batteries and solar/wind projects. Restoring trade pacts boosts agriculture exports.
Bifurcating Property Appreciation
Housing affordability plans like mortgage credits stimulate builder stocks but hit 1031 exchange appeal. Opportunity zone incentive dilution may temper commercial appreciation in poorer areas.
In the currency realm, Trump's strong U.S. dollar mantra would prevail over Harris's "friend-shoring" alliances reset. But escalating trade wars under Trump imperil emerging market currencies and FX volatility spikes. Meanwhile, Harris could move to cripple crypto innovation with anti-money laundering zeal versus regulatory clarity.
Of course, past presidents often broke from economic dogma amid shifting priorities and Congressional opposition. And some ideological impacts like Ronald Reagan's military splurge or Clinton's trade deals defied partisan dogma.
But the sheer magnitude of proposed upheavals from Trump's entrenched corporate capitalism versus Harris's regulatory progressivism virtually guarantees higher volatility and uncertainty for investors no matter the electoral outcome. Fund managers counting on predictability may be sorely disappointed by the incoming shocks to markets and investment strategy under either regime.
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