Regardless of who is the US election winner in November, there are enough controls within Washington to prevent full fulfillment of an individual’s policy ambitions alongside other more powerful drivers in the stock market, according to RBC Wealth Management.
Following the latest presidential debate between Donald Trump and Kamala Harris, pundits are carefully reviewing the policy stances of the two candidates and their potential impact on markets.
In an investment note by RBC Wealth Management, it was outlined that Trump is in favor of extending low tax provisions to all households while Harris wants to raise the rates on higher income earners. Trump supports tariffs across the board, in contrast with Harris. Trump is likely also to have a more business-friendly regulatory regime.
On industries, Trump could be more supportive of banks, financial services and traditional energy. Harris is seen to favor clean energy, cleantech as well as pharmaceuticals and healthcare insurers. Both are positive on tech and military weapon contractors.
Checks and Balances
But irrespective of who secures an election victory in November, RBC Wealth Management notes that it is «convinced that the formal and informal checks and balances built into the government’s structure will constrain the next president from fulfilling her or his full slate of policy goals».
Greater Drivers
The bank also highlighted other factors that will play «greater roles in shaping the market’s direction» including the natural ebb and flow of the business cycle, the Fed’s monetary policies and industry innovation.
«We have long held that the stock market doesn’t march to the president’s drum – or Washington, DC’s for that matter. Quite often other factors supersede developments inside the Beltway,» the bank added.
«For individual investors, we think the best investment strategy vis-à-vis elections is to give deference to the long-term investment strategy that is already in place, and to avoid the temptation of making drastic asset class or sector changes based on various election outcome scenarios.»