Trump claims a Joe Biden presidency would cause stock gains to 'disintegrate and disappear,' but JPMorgan says it could actually boost the market
Trump attacked presidential hopeful Joe Biden on Monday morning, saying that stocks and 401ks would "disintegrate and disappear" under a Biden administration. That argument was contradicted by a recent research note from JPMorgan. The firm said a Biden White House would be a "neutral to slight positive" for equities, and added that a "diplomatic approach" would reduce volatility.
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Might a Joe Biden presidency send the stock market into a nosedive and end months of steady gains? President Donald Trump appears to think so. On Monday, Trump tweeted that if Biden wins the presidential election in November, stocks and 401ks would "disintegrate and disappear."
If you want your 401k’s and Stocks, which are getting close to an all time high (NASDAQ is already there), to disintegrate and disappear, vote for the Radical Left Do Nothing Democrats and Corrupt Joe Biden. Massive Tax Hikes - They will make you very poor, FAST! — Donald J. Trump (@realDonaldTrump) July 6, 2020
The president claimed that Biden would usher in "massive tax hikes" that would make people "very poor, FAST!" It's certainly not the first time Trump lobbed bombastic rhetoric at Biden over the presumptive Democratic nominee's possible effects on a rising stock market. The president took the same approach on Thursday at a White House press conference. Yet JPMorgan said in a note to clients on Monday that a Biden White House could be a boon to the market. The firm's analysts say it's not likely that the former vice president's economic strategy would cause the stock market to tank. Read more: GOLDMAN SACHS: Buy these 13 stocks that are poised to crush the market within the next 2 weeks as earnings season gets underway The bank's equity-strategy team said a Biden administration would be a "neutral to slight positive" for equities, and added that "a more diplomatic approach to domestic/foreign policy will likely result in lower equity volatility and risk premia." With the economy still battered by the coronavirus pandemic, the investment bank projected that policies to speed up the recovery would likely anchor the first half of a Biden term. "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," JP Morgan analysts said. Several planks of Biden's economic platform so far include hiking the corporate tax rate from 21% to 28%, a partial rollback of Trump's tax cuts passed in 2017. He also supports raising the federal minimum wage to $15, a move that JP Morgan said. In May, Biden said in a CNBC interview he wouldn't raise taxes for people earning under $400,000 a year, and added tax increases would be implemented for the wealthier portion of the public. Read more: Bank of America identifies 3 indicators that could make or break the stock market this summer – and warns they're all deteriorating fastJoin the conversation about this story » NOW WATCH: Here's what it's like to travel during the coronavirus outbreak
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Summary List Placement A Democratic sweep in November would place stocks on a rollercoaster ride through...Summary List Placement A Democratic sweep in November would place stocks on a rollercoaster ride through the end of the year, Morgan Stanley strategists said Friday. US equities are among the few assets poised for a "detour" should a so-called blue wave take place. The market's steady climb would reverse temporarily before correcting in 2021, the analysts said. Stocks would initially dip on fears of higher corporate taxes and uncertainty around future stimulus, according to the bank. Once the party can clarify its fiscal relief plans, a follow-up to March's CARES Act and continued economic recovery can place stocks back on their upward path, the strategists added. Visit the Business Insider homepage for more stories. A "Blue Wave" come Election Day can boost stocks, but only after bouts of strong volatility and a knee-jerk decline, Morgan Stanley strategists said Friday. Current polls suggest Democratic presidential nominee Joe Biden will beat President Donald Trump in November, and that the Democratic Party holds a strong chance of securing control of Congress. Yet US equities are among the few assets poised for a "detour" should such a sweep take place, the bank said in a note to clients. While some assets such as Treasurys and oil would face a steady decline, an overwhelming Democratic victory would form a temporary deviation from stocks' upward trajectory, they added. The market's immediate reaction will likely be negative, according to the firm. Fears of tax hikes will drive initial selling and lower earnings outlooks. Read more: 'The largest financial crisis in history': A 47-year market vet says the COVID-19 crash was merely a 'fake-out sell-off' — and warns of an 80% stock plunge fraught with bank failures and bankruptcies The continued economic recovery would drive some derating of earnings-per-share multiples, posing a short-term risk until profit growth catches up with the updated forecasts. Uncertainty around future stimulus can also cloud initial hopes for fresh relief, the bank said. "We expect fiscal expansion to provide some offset [to higher taxes], but until the market knows the type of fiscal expansion after a Democratic sweep, expect that equity risk premium could remain elevated into January," the team of strategists wrote. Read more: Goldman Sachs says to buy these 21 stocks poised to deliver the strongest sales growth through year-end Still, stocks should resume their climb once volatility dies down and investors get a clearer look at the Biden administration's legislative agenda, according to Morgan Stanley. The continuation of economic recovery will revive spending and drive earnings growth. A follow-up to the March CARES Act will lift bullishness, and Morgan Stanley expects the tax scare to give way to a smaller-than-expected increase. "Our base case is to buy any dip on a blue wave as we think tax policy is difficult to enact and think the legislative focus will lean toward CARES 2 as a top priority," the team said. As for other outcomes, the bank views a divided government as having less of an up-front slump but a longer struggle with passing new stimulus. The nation's economic rebound could stall and slam investors' bullish forecasts, the strategists added. Now read more markets coverage from Markets Insider and Business Insider: Jerome Myers left corporate America to start real-estate investing and amassed a portfolio with over 90 units. He shares the 4-part strategy he's using to chip away at his 1,000-unit goal. Shaquille O'Neal, former Disney executives, and Martin Luther King Jr.'s son target $250 million SPAC launch Xilinx soars 17% on report rival AMD is in talks to buy it for $30 billionJoin the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship
Summary List Placement US stocks climbed on Wednesday as investors digested a disorderly presidential debate and...Summary List Placement US stocks climbed on Wednesday as investors digested a disorderly presidential debate and wavering hopes for a near-term stimulus deal. All three major US indexes climbed through the day on renewed hopes for a deal. Stocks pared some gains after Senate Majority Leader Mitch McConnell balked at Democrats' latest proposal. The trio of indexes notched their first monthly losses since March after failing to retrace early September's tech-led slumps. On the economic data front, the September ADP report said US private firms added 749,000 payrolls last month, handily beating the median economist estimate of 649,000 payrolls. Watch major indexes update live here. US equities climbed on Wednesday as investors bet on slight progress in stimulus-deal talks. Premarket futures traded negative until Treasury Secretary Steven Mnuchin told CNBC that he expected to reach a stimulus deal with House Speaker Nancy Pelosi. All three major US indexes then opened in positive territory and gained through the session on revived hopes for a near-term compromise. Still, legislators have a ways to go before new spending proposals reach President Donald Trump's desk. House Democrats are set to vote on their $2.2 trillion measure tonight despite Senate Majority Leader Mitch McConnell balking at the bill's size. Pelosi and Mnuchin indicated they will continue to negotiate on a spending package. Here's where US indexes stood at the 4 p.m. ET close on Wednesday: S&P 500: 3,363.00, up 0.8% Dow Jones industrial average: 27,781.70, up 1.2% (329 points) Nasdaq composite: 11,167.51, up 0.7% Read more: BANK OF AMERICA: Buy these 29 high-quality value stocks primed to cash in on the economic recovery Despite Wednesday's gains, all three major indexes registered their first monthly declines since March. The gauges suffered throughout the month as investors balked at tech giants' lofty valuations and secured profits made in the market's summer rally. The positive market open was a turnaround from declines in the futures market late Tuesday as President Donald Trump and former Vice President Joe Biden sparred on stage for the first time. The chaotic presidential debate traded policy discussion for insult-tossing and interruptions, leaving some to wonder whether two more scheduled debates would still take place. Trump repeated claims that mail-in voting is fraudulent and stopped short of confirming that he would accept defeat should his opponent win in November. Several analysts have said a disputed election result would likely drive outsized market volatility and temporarily weigh on stocks. "It's hard to pick a winner, I think we're all losers as far as that debate is concerned, but Biden went into the debate clearly ahead in the polls and I'd be amazed if last night changed anything," Craig Erlam, a senior market analyst at Oanda Europe, said in a note. "I guess he technically wins by default." Read more: Michael Smith returned 39% to investors last year and is outpacing most of his rivals again in 2020. He breaks down how his fund differentiates itself from the competition, and shares 4 of his top stock picks today. Indexes also pared some premarket losses after a better-than-expected reading from the monthly ADP report. Private US companies added 749,000 payrolls in September, the company said. That came in above the median economist estimate of 649,000 payrolls, according to Bloomberg data. The monthly ADP report serves as a precursor to the US government's nonfarm-payrolls report on Friday. That release is expected to show that the unemployment rate fell to 8.2% from 8.4%. Economists also expect it to show 850,000 payroll additions in September. Healthcare and consumer staples names drove indexes higher while energy and industrial stocks notched slight losses. Popular tech names including Apple, Microsoft, and Nvidia gained. Palantir sank below its opening price of $10 per share after surging immediately after its highly anticipated direct listing. Asana similarly declined after its own Wednesday debut. Disney sank after announcing plans to lay off 28,000 workers in the company's struggling resort business. It would be one of the largest layoffs during the coronavirus pandemic. Read more: JPMORGAN: The best defenses against stock-market crashes are delivering their weakest results in a decade. Here are 3 ways to adjust your portfolio for this predicament. Micron fell as gloomy forward guidance overshadowed the chipmaker's strong quarterly performance. Though the company nearly doubled its profit, investors dumped shares after Micron said it wasn't sure when chip sales to Huawei could resume; Huawei's purchases made up 10% of Micron's fourth-quarter sales. Spot gold sank after flirting with the $1,900 threshold, sliding as much as 0.9% to $1881.4800 per ounce. The precious metal has toyed with the key psychological level through the past week after losing the support in mid-September. Oil traded mixed. West Texas Intermediate crude jumped as much as 2.8%, to $40.37 per barrel. Brent crude, oil's international benchmark, fell 1.8%, to $40.30 per barrel, at intraday lows. Now read more markets coverage from Markets Insider and Business Insider: GOLDMAN SACHS: Buy these 16 stocks best-positioned to take advantage of unprecedented Fed money printing and potentially higher inflation in the years ahead Record IPO frenzy will continue through October, NYSE president says US pending home sales leap to record as housing-market surge continuesJoin the conversation about this story » NOW WATCH: Why some Hong Kong skyscrapers have gaping holes
Odds of a Biden presidency are rising according to this stock signal, and a win would pose few risks to the market, LPL says
One stock market signal is pointing to rising odds of a Joe Biden presidency, according to...One stock market signal is pointing to rising odds of a Joe Biden presidency, according to a note published by LPL on Monday. And if Biden does win and become president next year, the risks to the market will be minimal, and no more than the risks posed to the market under an Obama presidency, LPL said. "We do not see a particularly strong reason to fear a Biden presidency from a market perspective today," LPL said. Visit Business Insider's homepage for more stories. Joe Biden's chances in the poll booth this November are on the rise, according to one stock market signal. In a note published on Monday, LPL highlighted that a basket of stocks perceived to perform well under a Joe Biden presidency are outperforming a basket of stocks perceived to perform well under a second-term Donald Trump presidency. Citing data from Strategas Research Partners, LPL showed that the Joe Biden stock portfolio has reached its highest level of relative outperformance to the Donald Trump stock portfolio since February 2020 in recent weeks. The relative outperformance signals that the market may increasingly view a Biden presidency as likely, though LPL does acknowledge that the individual stocks within the portfolios are driven by other factors as well. Read more: GOLDMAN SACHS: Buy these 9 stocks that are poised to continue crushing the market as the 'shared favorites' of Wall Street's biggest investors If Biden does win the upcoming November election, the chances of the Democrats flipping the Senate from red to blue are above 50%, according to LPL. Read more: 35-year market vet David Rosenberg warns the stock market's rally features distortions that were glaring during the tech bubble — and lays out his plausible scenario for a crash And in a scenario where the Democrats control the House, the Senate, and the presidency come January 2021, Joe Biden will have more freedom to pass his agenda, which can have a direct impact on the economy, and ultimately the stock market. A recent research note from Liberum showed that the economy and stock market do significantly better under a Democratic president than under a Republican president, as Democratic policy initiatives to stimulate consumption via expanded unemployment benefits and food stamps have a bigger economic impact than Republican initiatives of tax cuts and deregulation. LPL said it believes that risks to the stock market are few, and investors should not sell their stocks based on whether Biden or Trump wins the November election. Read more: Chris Mayer wrote the book on how to make 100 times your money with a single stock. He gives an in-depth assessment of the latest company that 'checks all my boxes.' "We foresee some market risks in a Biden presidency, but no more than in an Obama presidency, which had a strong stock market record," LPL concluded. And while one stock market signal is pointing to rising odds of a Biden presidency, another is still pointing to a Trump presidency. Generally, a rising stock market in the three months prior to the presidential election helps the incumbent party, while the opposite is true for a falling market. Since the three-month clock started ticking on August 3, stocks, as measured by the S&P 500, are up 4% as of Monday's close, representing a benefit to President Trump's re-election chances. Read more: Bank of America shares a trading strategy designed to boost returns from a 'potential blow-off' rally in Apple's stock as it surges past big-tech peersJoin the conversation about this story » NOW WATCH: We tested a machine that brews beer at the push of a button