Markets are increasingly turning their attention to the campaign trail in the United States with the November election fast approaching. The key question on everyone’s mind is how the outcome would affect certain sectors and its implications for portfolios.
Another one of the big promises from Mr. Trump’s camp is to go stricter on tariffs, which is going to make imported goods more expensive for retailers, in turn squeezing their margins. While a Trump win will be incrementally negative for all retailers, a Harris win would just be negative for staples retailers but neutral for other categories of retailers.
Mr. Trump’s “promise” to replace the 2010 Affordable Care Act is incrementally negative for Insurance companies as they benefitted from coverage expansion and subsidies from the government, prompting an underweight recommendation for the Insurance industry in case Mr. Trump wins and manages to replace the ACA. We would like to highlight, though, that his previous attempt to replace Obamacare in 2017 wasn’t successful.
Ms. Harris also promised a big tax overhaul, but in a direction far from Mr. Trump’s. She promised to expand the Child Tax Credit to US$3,600 from US$2,000 while also expanding the Earned Income Tax Credit for low-income families, free universal preschool, and cancellation of medical debt for up to three million Americans.