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Presumed Democratic presidential candidate Joe Biden highlights a contrasting leadership style with that of President Donald Trump when speaking at the Philadelphia City Council on June 2 about protests after the death of George Floyd, which Biden called “a wake-up call for our nation. ”
The holiday weekend has done nothing to stem the positive momentum in US stocks. Strong US jobs data boosted investors on Thursday and futures are higher early Monday, implying a 350 point gain for the Dow Jones Industrial Average (DJIA) at the opening.
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But coronavirus cases continue to rise, with another daily record of new cases for the United States on Friday, while electoral uncertainty and associated risks also linger on the horizon. Recent national polls show that presumptive Democratic presidential candidate Joe Biden is ahead of President Donald Trump, a Republican. Analysts and investors have seen some of Biden’s policies as potential negative for stocks, while Trump argued last week that “the stock market will not be reduced to anything” if he is not reelected on November 3.
In our call of the dayJPMorgan strategists say that contrary to that view, a Biden victory in November would be “neutral to slightly positive” for the stocks. Democrats’ main economic policies include raising the corporate tax rate from 21% to 28%, partially reversing the 2017 Republican corporate tax cut, and raising the federal minimum wage. The investment bank’s US equity strategy team also says it expects the former vice president to ease tariffs on China and increase spending on infrastructure.
Read: How to Position Your Portfolio for a Joe Biden Presidency
Many presidential challengers tend to campaign extremely, particularly during their party primaries, and then converge toward the political center. Biden positioned himself as one of the two or three more moderate candidates in what was an extraordinarily large Democratic field.
JPMorgan strategists point out that Biden’s political priorities were initially established before COVID-19 and would surely change. “Given current economic weakness, business recovery and job growth are likely to be prioritized over policies that could slow economic growth and perhaps even jeopardize the outcome of desired midterm elections by 2022,” The investment bank’s US equity strategy team said in a note. The higher corporate tax rate would generate a profit of about $ 9 for earnings per share for the S&P 500 (SPX), the strategists warned, led by Dubravko Lakos-Bujas.
However, they said the increase in corporate taxes could end at a rate of less than 28% and would also be offset by lower rates, infrastructure spending and higher wages. “Also, a more diplomatic approach to domestic / foreign policy is likely to result in less volatility in stocks and risk premiums,” they added.
The best results from the team’s Democratic agenda, while emphasizing that the agenda remains fluid, include Tesla (TSLA) and Nikola (NKLA) benefiting from spending on alternative energy and green technologies. Biden’s health care agenda places Johnson & Johnson (JNJ) CVS (CVS) and others in the top-performing basket, while fare cuts see Procter & Gamble (PG) Nike (NKE) Boeing (BA) 3M (MMM) and DuPont (DD) feature.
An increase in the minimum wage would have a positive impact on consumer spending and would be a positive net result for S&P 500 companies despite higher costs and some job losses, according to JPMorgan. “Distinguishing between winners and losers will depend on companies that will see incremental demand due to increased disposable income, less labor intensity (income / employees) and higher margins.”
As a result, Apple (AAPL) Facebook (FB), Google’s parent alphabet (GOOG) (GOOGL), Twitter (TWTR), and Visa (AT: VISA) appear on the best list.
The market
After strong job data sent US stocks higher on Thursday, the Dow would open higher again on the other side of the Independence Day holiday weekend as positive sentiment in Around the economic recovery continued. Dow futures (YM00) were up 1.4%, S&P 500 futures (ES00) were up 1.1% and Nasdaq futures (NQ00) were 1.2% higher before the open. European stocks (XX: SXXP) rose early Monday, led by banks and after a rally in Asia overnight: China’s Shanghai Composite (CN: SHCOMP) rose nearly 6%.
The buzz
Warren Buffett’s Berkshire Hathaway (BRK) (BRK) is buying the natural gas storage and transmission assets of Dominion Energy (D) in a deal worth $ 9.7 billion in total, the company said Sunday night.
Ridesharing company Uber (UBER) agreed to buy the Postmates food delivery service for around $ 2.65 billion, according to media reports Sunday night.
Cineworld (UK: CINEMA), the world’s second-largest cinema operator, said Monday that Cineplex of Canada (CA: CGX) has initiated legal proceedings against it in connection with the termination last month of a proposed acquisition.
German manufacturing orders rebounded in May, rising 10.4% after their biggest drop in April since records began in 1991.
Big tech companies, including Alphabet, Google’s parent, Amazon and Facebook, are facing a series of proposed EU regulations aimed at curbing alleged anti-competitive behavior, a senior EU official said.
Random readings
The Las Vegas sportsbook suffers one of the biggest losses after the Bellagio Resort & Casino mistake.
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