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Wednesday, October 02, 2024

US 2024 PRESIDENTIAL ELECTIONS TRUMP VS HARRIS

تم إعداد هذا المنشور من قبل سنشري للاستشارات

US 2024 PRESIDENTIAL ELECTIONS TRUMP VS HARRIS
Shariah-Compliant Stock

US Elections

US voters will head to elections boots on November 5th to choose the next president for what could be a bumpy four-year presidency, as the Fed hinted at the start of the interest rate cutting cycle, a pivotal moment for the US economy.

The U.S. utilizes a two-party electoral system, where two main political parties, the Republicans and the Democrats, hold significant influence across all levels of government. In recent elections, the nominees were Donald Trump and Kamala Harris, representing their respective parties. To secure the Presidency, a candidaate must obtain a majority of 270 out of the 538 total electoral votes allocated based on population among the 50 states and the District of Columbia.

Biden was supposed to be competing for a second term, but in a dramatic twist, he withdrew from the race, which was called a 'coup' at the time. This ended his bid for re-election after a disastrous debate with Donald Trump. Later, Biden endorsed his vice president, Kamala Harris.

The Republicans are known for their pro-business stances. The Democrats, on the other hand, position themselves to the left of the Republicans, emphasizing social equality. Hence, it can be inferred that a Republican president favors the stock market more than a Democratic.

 

Accordingly, there are only two possible scenarios:

  1. Donald Trump Presidency
  2. Kamala Harris Presidency

Current Probabilities:

The polling data from RealClearPolling indicates that Kamala Harris is ahead of Donald Trump in the 2024 U.S. Presidential election. Specifically, Harris has 49.2% of the support, while Trump has 47.2%. This suggests a close race between the two candidates. Despite trailing in several polls initially after Biden exited the race, Harris has been narrowing the gap between Democrats and Republicans and boosting her approval ratings since announcing her candidacy.

Since Harris joined the presidential race, recent polls revealed a significant increase in Democratic enthusiasm, contrasting with stagnant Republican enthusiasm.

 

Strategic Recommendation:

Given the same, a few stock market sectors are expected to face heightened volatility and investor attention. Consequently, in line with the same, the following investment ideas emerge:

1. Donald Trump Presidency

Long
A share Basket of

Short
A share Basket of

2. Kamala Harris Presidency

Long
A share Basket of

Short
A share Basket of

Current Probabilities:

The polling data from RealClearPolling indicates that Kamala Harris is ahead of Donald Trump in the 2024 U.S. Presidential election. Specifically, Harris has 49.2% of the support, while Trump has 47.2%. This suggests a close race between the two candidates. Despite trailing in several polls initially after Biden exited the race, Harris has been narrowing the gap between Democrats and Republicans and boosting her approval ratings since announcing her candidacy.

Since Harris joined the presidential race, recent polls revealed a significant increase in Democratic enthusiasm, contrasting with stagnant Republican enthusiasm.

 

Strategic Recommendation:

Given the same, a few stock market sectors are expected to face heightened volatility and investor attention. Consequently, in line with the same, the following investment ideas emerge:

1. Donald Trump Presidency

Long
A share Basket of

Short
A share Basket of

2. Kamala Harris Presidency

Long
A share Basket of

Short
A share Basket of

Current Probabilities:

Name Ticker Position Last Price ($) 52-Week Low ($) 52-Week High ($) Exposure ($) Units Analyst Target Price ($) Potential Price Appreciation Market Capitalization ($B) Total Analyst Recommendation Recommendation Consensus Beta
Buy Hold Sell
Scenario 1: Donald Trump Presidency
Lockheed Martin Corp LMT Long $577.40 $393.77 $583.75 $25,000 43 $550.50 -5.62% $137.62 14 10 2 3.88 0.21
Caterpillar Inc CAT Long $330.90 $233.77 $353.75 $25,000 76 $213.65 -10.25% $189.57 18 3 1 4.33 1.29
Chevron Corp CVX Long $114.99 $171.20 $217.00 $25,000 176 $171.13 4.99% $259.68 5 4 1 3.33 0.91
Simon Property Group Inc SPG Long $166.41 $102.11 $170.87 $25,000 150 $167.26 0.51% $54.25 8 3 0 3.70 0.97
First Solar Inc FSLR Short $256.66 $129.22 $306.77 $25,000 98 $288.74 12.59% $27.36 18 3 2 4.47 0.99
CVS Health Corp CVS Short $105.92 $52.77 $95.75 $25,000 424 $82.74 10.25% $74.23 8 3 0 3.99 1.10
Tencent Holdings Ltd TCEHY Short $39.77 $24.89 $55.67 $25,000 627 $47.37 10.25% $438.02 9 4 0 3.50 0.73
PDD Holdings Inc PDD Short $129.40 $88.01 $164.69 $25,000 193 $156.22 20.73% $179.70 57 2 0 4.90 1.16
Scenario 2: Kamala Harris Presidency
First Solar Inc FSLR Long $255.66 $129.22 $306.77 $25,000 98 $288.74 12.94% $27.36 32 1 3 4.47 0.99
CVS Health Corp CVS Long $105.92 $52.77 $95.75 $25,000 424 $82.74 -10.25% $74.23 18 3 2 3.99 1.10
Rivian Automotive Inc RIVN Long $117.89 $8.26 $247.87 $25,000 2238 $176.13 57.83% $11.26 14 1 3 3.89 2.23
NVDA Corp NVDA Long $570.91 $353.37 $620.66 $25,000 44 $580.99 1.77% $288.60 46 4 0 4.60 2.21
Chevron Corp CVX Long $119.98 $114.99 $217.00 $25,000 110 $163.22 12.50% $123.59 7 1 0 3.11 0.91
CoreCivic Inc CXW Short $9.70 $5.53 $17.20 $25,000 2580 $10.25 5.67% $1.47 3 1 1 3.70 0.62
Altria Group Inc MO Short $36.98 $37.00 $45.89 $25,000 677 $43.95 18.67% $81.77 3 3 0 4.50 0.72
Smith & Wesson Brands Inc SWBI Short $12.97 $11.16 $22.98 $25,000 1928 $18.67 43.95% $8.17 0 3 0 4.50 0.98

Recommendation Rationale:

Concerning the Trump Presidency, the beneficiaries could benefit from Trump's policies, such as infrastructure (like CAT) and defense companies (like LMT). Small-cap stocks will likely do well as they have historically performed well under Republican administrations. Trump’s tax policies will benefit those with high effective tax rates. Real estate stocks (like SPG), as Trump has a background in real estate, may implement policies favorable to the sector. Energy stocks (like CVX), particularly those involved in oil and gas, could also benefit, as Trump has supported the fossil fuel industry.

Sectors that could potentially be affected by a Trump win include clean energy companies (like FSLR). Trump intends to roll back policies favoring green energy and electric vehicle companies. Healthcare companies (like CVS) may also face increased uncertainty if Trump's administration moves to repeal the Affordable Care Act. Technology companies relying on global supply chains could also feel the impact of Trump's trade policies and potential tariffs on foreign goods. Furthermore, emerging markets that heavily depend on exports to the United States could also be affected by Trump's trade strategies (like TCEHY and PDD).

Regarding the Harris Presidency, they advocate for healthcare reform. Hence, healthcare companies (like CVS) are expected to benefit. Their pledge to rejoin the Paris Climate Agreement and propose clean energy policies may also indicate favorable conditions for companies (like FSLR and RIVN). Furthermore, the proposed $1 trillion infrastructure plan could benefit companies involved in infrastructure projects. Moreover, their commitment to increasing science and technology research funding may bode well for technology companies (like NVDA). Lastly, the proposed policies to increase the minimum wage and tax relief for the middle class may positively impact consumer discretionary companies.

Furthermore, they advocated for the Paris Climate Accord and stressed the urgency of taking action to address climate change. This stance potentially poses challenges for companies in the fossil fuel industry (like CVX). Additionally, they voiced support for ending private prisons, which could impact businesses operating in the private prison sector (like CXW). They have proposed reducing the defense budget, which may have potentially harmful implications for companies in the defense industry (like SWBI).

Risks and Assumptions related to Back-tested trading strategies
The risks and assumptions listed here are not intended to be an exhaustive summary of all the risks and assumptions involved.
The strategy might suffer from look-ahead bias which occurs due to the use of information or data in a study or simulation that would not have been known or available during the period being analyzed. This can lead to inaccurate results in the study or simulation.
Future price movements may not be exactly the same as the historical price movements and this could lead to variation in performance.
Testing can sometimes lead to over-optimization. This is a condition where performance results are tuned so high to the past they are no longer as accurate in the future.
The model assumes no slippages in trading. Slippage refers to the difference between the expected price of a trade and the price at which the trade is actually executed.
The back-tested strategy might be at risk of data dredging, which is the behavior of testing multiple hypotheses at one time, resulting in picking the data that best supports your main hypothesis.
Drawdowns in actual trading can be higher than the tested system and losses could be significant in the event of leverage.
Unforeseen events can lead to variation in performance from the tested trading strategy.
The tested result has been computed with price feeds available from Bloomberg.
The testing environment has not considered transaction or any other costs.
Trading indicators used for the purpose of testing has been provided by Bloomberg.
The strategy might suffer from data mining fallacy, selection bias and backfill bias.
A trading strategy that performs well on multiple datasets from one market (e.g., forex) might not perform as well in another market (e.g., stocks).
The strategy may not depict accuracy in terms of spread changes due to the spread-widening events.

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