The Election and the Markets: If Hillary Clinton Wins… Part I
Politics have no place in financial letters.
It really doesn't matter what I think of either candidate, and I’m not about to ruin our relationship by trampling on your politics.
What I do want to do is share some information that may be beneficial to your investing decisions whoever wins the White House.
This week, let’s begin with Hillary Clinton.
At the moment, she leads Donald Trump in the polls with a lead of 48.9% to 41.9%.
However, it’s still anyone’s game. It’s really coming down to the wire, with both butting heads over the needed direction of the country.
But let’s just say Hillary wins the election.
Which stocks are likely to move higher and lower?
To begin, one sector that could take a brief hit is biotech, considering her position on price gouging.
However, even if she is tough on the sector, don’t count it out for too long. The same 20-30 year catalysts are still firmly in place for long-term growth, including 80 million baby boomers, newly insured Americans, and wild M&A activity.
One promise that stood out was her position on infrastructure.
Like Trump, she wants to improve our infrastructure. She plans to increase funding by $275 billion over five years. In reference to fixing roads, bridges, airports and highways Hillary said, “In my first 100 days as president, we will make the biggest investment in new, good-paying jobs since World War II.”
Such a move could benefit companies like Vulcan Materials (VMC), the largest producer of stone aggregates that are used in concrete. Other companies that could benefit from increased spending to update infrastructure include Astec Industries (ASTE), which builds portable machines that mix concrete and asphalt, as well as engineering firms, like Jacobs Engineering (JEC).
Other policy proposals include installing 500 million photovoltaic panels by 2020, which would greatly benefit solar-related stocks.
That would equate to about 135 to 175 gigawatts of solar capacity, increasing U.S. capacity by more than six fold, which could benefit companies like First Solar (FSLR), Yingli Green Energy (YGE) and JA Solar (JASO).
As for how she plans to help boost the economy, one fix is to raise taxes on wealthier Americans, including a 4% surcharge on income above $5 million, effectively creating a new top tax bracket of 43.6%.
Fortunately, Clinton does not have plans to raise taxes on the middle class. In fact, according to Clinton’s site, current ideas will have little to no impact on this class.
When it comes to corporate taxes, Clinton has no plans to reduce the 35% tax rate. In fact, according to her website, she will “close tax loopholes like inversions that reward companies for shifting profits and jobs overseas.”
“She will charge an “exit tax” for companies leaving the U.S. to settle up on their untaxed foreign earnings. She will close tax loopholes that let Wall Street money managers pay lower rates than some middle-class families.
Clinton also wants to be your “small business president” with a promise of cutting red tape, simplifying tax filings, and targeting more tax credits to small business owners.
All in an effort to encourage hiring and growth…
It’ll be interesting to see how this all plays out. All we know right now is that the race is far from over.