- "The consensus view is that a Democrat victory in November will be a negative for equities," JPMorgan analysts led by Dubravko Lakos-Bujas wrote in a Monday note. "However, we see this outcome as neutral to slight positive."
- Several factors could make a
Joe Biden presidency positive forstocks , the note said, including a smaller-than-expected rollback of corporate tax cuts, infrastructure spending, softened tariff rhetoric, and an increased federal minimum wage. - JPMorgan added that "history suggests that challengers to an incumbent typically campaign at an extreme only to converge to the center post-election," meaning there could still be a shift in some policies.
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A victory for Joe
"The consensus view is that a Democrat victory in November will be a negative for equities," JPMorgan analysts led by Dubravko Lakos-Bujas wrote in a Monday note. "However, we see this outcome as neutral to slight positive."
Several factors could make a Biden presidency positive for stocks, according to the note.
"Given the current economic weakness, business recovery and job growth are likely to be prioritized over policies that could dampen economic growth and perhaps even jeopardize the desired 2022 midterm election outcome," Lakos-Bujas wrote. "As such, the degree of corporate tax reversal may ultimately be lower than currently discussed."
Other policy proposals — including infrastructure spending, softened tariff rhetoric, and an increased federal minimum wage — would be "net positive for S&P 500 earnings and largely offset the corporate tax headwind," the note said.
JPMorgan said that "history suggests that challengers to an incumbent typically campaign at an extreme only to converge to the center post-election," meaning there could still be a shift.
And many of Biden's policy proposals were introduced in a healthy economy before the primaries and the worst of the COVID-19 crisis, so there may be further room for change, the note said.
One of the biggest reasons a Biden presidency could be bad for stocks is that the 2017 Tax Cuts and Jobs Act could be reversed fully or partially. Goldman Sachs said in June that rolling back the tax law would reduce its 2021 S&P 500 earnings estimate by $20 per share, to $150.
Other firms such as Morgan Stanley see a wider range of possibilities that may still play out and could make different trades more attractive.
JPMorgan also included lists of stocks that could benefit from a Biden victory in November, including Tesla, Nikola, Johnson & Johnson, CVS, Caterpillar, Apple, Facebook, Alphabet, Twitter, and more.