Who Is Better For Markets? The Answer Might Surprise You.
Who Is Better For Markets? The Answer Might Surprise You.
If you think you know who is better for markets between Kamala and Trump, read this!
Today’s note is a quick one. The title is clickbait. If you are surprised by what I say here, you need to analyze:
Your information gathering process.
Your objectivity.
I got some pushback yesterday for saying Trump is better for markets than Kamala.
I understand politics is touchy for people, but you need to be able to separate your politics from the facts.
First of all, Trump had a bad debate. Markets were rattled during the debate, and sold off yesterday early in the day.
They rallied the rest of the day. You’ll note that the lows of the day closely correlated with the low in Trump’s election odds.
Obviously, there is more going on in markets than just “who will win the election?”
…isn’t there?
You wouldn’t know it from looking at this chart.
Still, the chart is a bit misleading. The weekly change in Trump odds and NQ prices have a correlation coefficient of .3635, which implies a moderate positive correlation between the two.
Wharton Assessments
Wharton published assessments of the Trump and Kamala tax and budgetary proposals, and released their analysis.
You can find Trump’s here, and Kamala’s here.
Kamala Assessment
Trump Assessment
Neither is particularly rosy. Trump’s is meaningfully better.
Capital Gains Tax
Kamala has come out in favor of a 28% capital gains tax. That is not a shockingly high number compared to history, which means it could happen.
Trump wants to cut or keep capital gains the same.
All else being equal, a higher capital gains tax is bad for stocks for obvious reasons. It decreases the actual realized gains investors can expect. By comparison, it increases the attractiveness of other types of investment, such as ones that offer cash flow.
Kamala has also endorsed unrealized capital gains. When you can compound forever, there is little incentive to sell stocks. Wealthy people often borrow against their portfolios when they need cash instead of selling. An unrealized cap gains tax pulls forward the tax, reducing that lock-in effect.
What This Means For You
You should probably vote in your own self-interest. That involves staying educated about the candidates' economic impacts.
The truth is Kamala would be horrible for risk assets. I’ve outlined why above. We can’t live in denial of that fact.
If you look at the totality of the information and conclude that’s a price you’re willing to pay for your social policies or concerns about Democracy or whatever it is, that’s fine. I certainly won’t take issue with that.
I just hope that we are all on the same page now.
Coming Soon
I am working on a pretty exciting project that I think will give us some additional insight into the direction the economy is headed. As I’ve written before, the growth scare narrative is dominating, and the direction of the future data is currently very valuable as a trader.
The first outputs of that work should be coming this week. It will be for paid subscribers only.
Ensure you’re subscribed to get all my free notes and sign up for a paid subscription to get valuable, deep insights into what’s happening beneath the surface.
Thanks for reading!
Disclaimer: The information provided here is for general informational purposes only. It is not intended as financial advice. I am not a financial advisor, nor am I qualified to provide financial guidance. Please consult with a professional financial advisor before making any investment decisions. This content is shared from my personal perspective and experience only, and should not be considered professional financial investment advice. Make your own informed decisions and do not rely solely on the information presented here.