Trump only says he can keep your wallet afloat, but JPMorgan says Biden’s victory would be neutral to positive for stocks


The holiday weekend did nothing to slow the positive momentum in US stocks. Strong US job data supported investors on Thursday and futures were higher early Monday, implying a gain of 350 points for the Dow Jones Industrial Average DJIA,
+ 0,35%

But coronavirus cases continue to increase, with a new daily record of new cases for the United States on Friday, while electoral uncertainty and the risks associated with it persist on the horizon. Recent national polls show that the presumed Democratic presidential candidate Joe Biden is ahead of President Donald Trump, a Republican. Analysts and investors have viewed some of Biden’s policies as potential negative points for stocks, while Trump said last week that “the stock market will fall to nothing” if he is not re-elected on November 3.

In our call of the day, JPMorgan strategists say that, contrary to this view, a Biden victory in November would be “neutral to slightly positive” for stocks. The Democrat’s main economic policies include raising the corporate tax rate from 21% to 28% – partially reversing the 2017 Republican corporate tax cut – and increasing 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 infrastructure spending.
Lis: How to Position Your Portfolio for a Joe Biden Presidency Many presidential challengers tend to campaign in the extreme, especially during the primaries of their parties, later converging on the political center. Biden has positioned himself as one of the two or three most moderate candidates in what was an unusually large democratic field.
JPMorgan strategists note that Biden’s political priorities were originally established before COVID-19 and would surely change. “Given the current economic weakness, the recovery of businesses and job growth will probably have priority over policies that could slow economic growth and perhaps even compromise the desired outcome of the mid-term elections in 2022” said the investment strategy team of the US investment bank in a note. The higher corporate tax rate would wind up the profits of the S&P 500 SPX by about $ 9,
+ 0.45%
earnings per share, warned the strategists, led by Dubravko Lakos-Bujas.
However, they said that higher corporate taxes could result in a rate below 28% and would also be offset by softening tariffs, infrastructure spending and higher wages. “In addition, a more diplomatic approach to domestic / foreign policy will likely lead to lower equity volatility and lower risk premia,” they added.
The top performances of the team’s Democratic agenda – although he stressed that the agenda remains fluid – include Tesla TSLA,
+ 7,95%
and Nikola NKLA,
both benefiting from spending on alternative energy and green technologies. Biden’s health program puts Johnson & Johnson JNJ,
+ 0.42%,
+ 0,21%
and others in the outperforming basket, while price escalation sees Procter & Gamble PG,
+ 0,75%,
+ 1,05%,
Boeing BA,
+ 0,27%,
+ 1,03%
et DuPont DD,
+ 2.67%
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. “The distinction between winners and losers will depend on which companies see additional demand due to higher disposable income, lower work intensity (earnings / employees) and higher margins.”
As a result, Apple AAPL,
Facebook FB,
Google parent Alphabet GOOG,
+ 1.85%
+ 1.93%,
Twitter TWTR,
+ 0.19%
a Visa VISA,
+ 0,68%
all of them appear on the list of outperformers.
The market
On Thursday, after good employment data pushed up US stocks, the Dow Jones is set to reopen higher across the Independence Weekend as positive sentiment around the economic recovery continued. Dow futures YM00,
+ 1.48%
up 1.4%, the S&P 500 future ES00,
+ 1.29%
rose 1.1% and the Nasdaq futures NQ00,
+ 1.27%
were 1.2% higher at opening. SXXP European Equity,
+ 1,25%
jumped early Monday, led by banks and following an overnight rally in Asia – Shanghai Composite SHCOMP of China,
+ 5.71%
climbed to almost 6%.
Warren Buffett’s Berkshire Hathaway BRK.B,
+ 0.47%
+ 0.19%
buys Dominion Energy’s D,
+ 0.41%
Natural gas storage and transportation assets as part of a deal valued at $ 9.7 billion, the company said on Sunday.
Uber carpooling company UBER,
+ 0.82%
has agreed to buy a Postmates food delivery service for about $ 2.65 billion, media reports said Sunday evening.
The second largest cinema operator in the world, Cineworld CINE,
said Monday that Canada’s Cineplex CGX,
+ 7.45%
has started legal proceedings against him regarding the termination, last month, of a proposed acquisition.
German manufacturing orders rebounded in May, jumping 10.4% after their largest drop in April since records started in 1991.
Large tech companies, including Google’s parent company, Alphabet, Amazon and Facebook, face a set of proposed European regulations aimed at limiting suspected anti-competitive behavior, said a senior EU official.
Random readings
Las Vegas sports betting suffers one of the biggest losses ever after a Bellagio Resort & Casino error.
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