Factors to consider heading into the November election
U.S. stock indexes up; Nasdaq out front, up ~0.7%
Cons disc leads S&P 500 sector gainers; Healthcare weakest group
Dollar, gold, crude slip; bitcoin off >1%
U.S. 10-Year Treasury yield falls to ~4.44%
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FACTORS TO CONSIDER HEADING INTO THE NOVEMBER ELECTION
The debate last Thursday between President Joe Biden and Republican rival, and former President, Donald Trump, has put more focus on the upcoming election in November and what may be different now versus 2016, when Trump won the presidency, writes Morgan Stanley equity strategist Michael Wilson in a note this week.
For one thing, the data now suggests the cycle is more mature, which supports a quality and large cap bias, he says.
In 2016, he says, the market welcomed a reflationary/ pro-fiscal playbook because the economy was recovering from the manufacturing/commodity downturn of 2015. Also, inflation was not as much of a headwind then for consumers.
"This is a different backdrop than today," he writes.
Also, he says the firm's public policy team thinks that the potential effects of tariffs, immigration and fiscal policy under a Republican win would "likely skew growth risks to the downside this time around" should that outcome happen.
"This would differ from 2016/2017 when investors focused primarily on fiscal benefits," he notes.
Wilson says investors should "stay selective within cyclicals" regardless of the election outcome.
(Caroline Valetkevitch)
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FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:
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EUROPE'S INSURERS WEAK AS ATLANTIC HURRICANE SEASON KICKS OFF - CLICK HERE
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INVESTOR POSITIONING IN EUROPE TURNS BEARISH - CLICK HERE
RBC GINGERLY LIFTS S&P 500 YEAR-END TARGET TO 5700 - CLICK HERE
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