What the Election Means for Markets

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Election Day is six weeks from yesterday, so you’re probably getting the question:

“What does the election mean for the markets?”

Specifically, we want to address, in plain English, what a Clinton or Trump win would mean for:

  • The major asset classes: Stocks, Treasuries, Gold, Oil, the US Dollar and
  • Which stock sectors will be winners or losers

We’re producing this research now because if you’re like advisors who subscribe to Advisor Cheat Sheet, you’re already getting asked questions about the election, and we want to make sure our paid subscribers have a clear, confident answer if a client or prospect asks about the potential market consequences of a Clinton or Trump victory.

We’re addressing this for two specific reasons.

  • I haven’t found a good, comprehensive, plain-English analysis of the election that focuses on the specific implications for all asset classes (not just stocks) and that singles out which stocks or sectors will rise or fall depending on the outcome.
  • The election is obviously a popular topic, and advisors will be talking about it with current clients and prospects. We want to make sure our paid subscribers have the talking points they need to turn those conversations into more assets and more clients – because the opportunity will be there for the informed advisor!

That’s why we made sure our election analysis covered all asset classes (not just stocks), because who wins will affect bond prices, oil prices, gold prices and the US dollar.

The election will also produce opportunities in specific stock sectors to outperform into year end, and we want our subscribers well versed in those potential opportunities, so when a prospect or clients asks – they have a specific answer!

As we enter what we believe will be a volatile fourth quarter, we will be dedicated to making sure our subscribers know what’s really driving markets, because we firmly believe volatility is an opportunity to strengthen your relationships with current clients and impress prospects who are currently with other firms.

We all know that successful advisors grow their books by connecting with high net worth clients, and to build trust with those clients you can’t just repeat company “perma-bull” strategies.

That is why we created Advisor Cheat Sheet, so that advisors can make sure they have an independent analyst that communicates with them weekly and quickly identifies the risks and opportunities for:

  • Stocks
  • Bonds
  • Currencies
  • Commodities, and
  • Interprets what economic data means for the market

Advisor Cheat Sheet is the weekly market cheat sheet our paid subscribers use to keep up on markets, seize opportunities, avoid risks and get more assets.

With a monthly subscription cost less than a single client lunch, we firmly believe we offer the best value in the independent research space.

As a courtesy, we’ve included an excerpt our research for Advisor Cheat Sheet that provides a roadmap for the markets given a Trump or Clinton victory.

What the Election Means for Markets

What’s Expected: A Clinton Victory

Polls have tightened, but most of the prediction/betting sites still have Clinton as a pretty comfortable front runner for two main reasons:

  • First, the electoral college map favors her (remember the presidential election is actually 50 individual elections, not a national poll).
  • Second, most of the polls where Trump and Clinton are tied factor in third party candidates (Libertarian Gary Johnson and the Green Party’s Jill Stein) and it’s not clear just how powerful that third party vote will be (it could be overstating the tightness of the race because third party voters aren’t the most reliable).

An Indicator to Watch: I’m not a political analyst, but the ones I’ve read have pointed to Pennsylvania as a key indicator of the election. If Pennsylvania starts to turn decidedly for Trump, that could signal a potential upset, as it will imply enthusiasm for Trump among historically Democrat blue-collar workers is rising, and that’s the demographic Trump needs if he wants to pull off an upset.

General Market Outlook Depending On the Outcome (between Election Day and Year End):

Market Winners (Regardless of Who Is Elected)

Infrastructure Stocks: Both candidates will likely expand infrastructure spending. Some names to watch (there isn’t a pure play infrastructure ETF): Restricted for subscribers. IGF is a global infrastructure ETF, but the US makes up less than 1/3 of the ETF, so it’s not a pure play (although still not a bad idea as increased government spending is likely across the globe).

Defense Stocks: Both candidates will likely increase defense spending, at least initially as the push to eradicate ISIS increases. Obviously given their stated policies it’s more positive for defense names if Trump gets elected, but either way this is a sector that should have a tailwind regardless of the outcome. Our preferred Defense ETF is: Restricted for subscribers.

Gold: Regardless of who wins the outlook from a political and macro standpoint isn’t exactly rosy, so gold will likely catch a mild bid in either case even if it’s nothing more than as a protest vote by investors (neither candidate is exactly wanted by the markets).

Clinton Victory

Macro View: The market “prefers” a Clinton win solely because it’s more of the same. So, a Clinton victory should be viewed more as “not bad” for stocks rather than “good” (in the short term) compared to the uncertainty of a Trump victory.

Market Reaction: Stocks: A mild relief rally (relief there were no surprises) but nothing particularly bullish. Bonds: Also a mild relief rally. Oil/Gold: Oil little changed, gold likely modestly higher. US dollar: Little changed.

Winners: Hospitals (Thesis: No Obamacare repeal or replacement, ETF: Restricted for subscribers), gun manufacturers (Thesis: Potential restriction on certain firearm sales. No ETF, best stock, Restricted for subscribers). Alternative energy (Thesis: Continuation of investment in alternative energy programs. ETFs: Restricted for subscribers.

Losers: Biotech/Pharma (fears of regulation/price ceilings), energy & coal (Thesis: Increased environmental regulation reducing coal and fossil fuel production, ETFs: Restricted for subscribers. Private prison stocks (Thesis: Clinton said she wants them basically out of business at the debate. Stocks: Restricted for subscribers). Notable: Natural gas may be the exception here and worth a look on a dip as natural gas is the favorite fossil fuel of the alternative energy crowd.

Trump Victory

Macro View: The level of uncertainty regarding his policies will be very high, and that will elicit a “sell first, ask questions later” immediate reaction from stocks. But given the period between Election Day and Inauguration is usually a quiet one for the President Elect, I don’t think a Trump victory will, by itself, cause a material selloff into year end.

Market Reaction: Stocks: Likely a mild-to-modest selloff, but not a bearish game changer. Bonds: Treasuries lower near term but not a bearish game changer. Dollar: Lower as markets price in potentially contentious trade deals. Gold/Oil: Both up (potentially materially) on uncertainty (the former more so than the latter).

Winners: Coal (Thesis: Reduced regulation on coal production and sales. ETF: Restricted for subscribers), energy (Thesis: Relaxed regulatory environment. ETF: Restricted for subscribers), pharma/biotech (Thesis: No risk of price controls or ceilings. ETF: Restricted for subscribers), banks (Thesis: Potentially higher rates, rollback of certain Dodd-Frank regulations. ETF: Restricted for subscribers).

Losers: Hospitals (Thesis: Potential healthcare law changes. ETF: Restricted for subscribers). Alternative energy (Thesis: less funding for programs. ETFs: Restricted for subscribers).

Bottom line, this election is going to move markets (in 2012 the S&P 500 dropped 7% ahead of and after the election, and that one was tame compared to this one) and there will be opportunities to boost 2016 performance and impress clients if you are positioned right.

If you don’t have a report that tells you, in plain English, what the election means for all asset classes, and doesn’t specifically identify sectors and stocks that will rally or decline based on the outcome, then please consider a subscription to Advisor Cheat Sheet.

Our subscribers know we will cover the election for them, so that they aren’t blindsided by the result or market movements, just like we’re going to cover the other looming macro events in Q4: ECB Decision, Fed rate hike, Italian Referendum vote, OPEC meeting, etc.

There is no penalty to cancel your subscription, no long-term commitment, and it costs less per month than one client lunch!

We are continuing to extend a special offer to new subscribers of our full report that we call our “2-week grace period.”

If you subscribe to Advisor Cheat Sheet today, and after the first two weeks you are not completely satisfied, we will refund your first payment, in full, no questions asked.

Click this link to begin your quarterly subscription today and learn the 10 ETFs and 6 stocks we think will outperform or underperform depending on who wins.

Increased Market Volatility Will Be an Opportunity for the Informed Advisor and Investor

We aren’t market bears, but we said consistently that things were going to be volatile in 2016, and we were right!

And, as we approach the biggest event for markets since Brexit (the BOJ meeting next Wednesday) the advisor who is able to confidently and directly tell their nervous clients what’s happening with the markets and why stocks are up or down, and what the outlook is beyond the near term (without having to call them back), will be able to retain more clients and close more prospects.

We view volatility as a prime opportunity to help our paid subscribers grow their books and outperform markets by making sure that every trading day they know:

1) What’s driving markets

2) What it means for all asset classes, and

3) What to do with client portfolios

We monitor just about every market on the globe, break down complex topics, tell you what you need to know, and give you ETFs and single stocks that can both outperform the market and protect client portfolios.

All for $37/month with no long term commitment.

I’m not pointing this out because I’m implying we get everything right.

But we have gotten the market right so far in 2016, and it has helped our subscribers outperform their competition and strengthen their relationships with their clients – because we all know the recent volatility has resulted in some nervous client calls.

Our subscribers were able to confidently tell their clients 1) Why the market was selling off, 2) That they had a plan to hedge if things got materially worse and 3) That they were on top of the situation.

That’s our job, each and every trading day, and we are good at it.

We watch all asset classes to generate clues and insight into the near-term direction of the markets, but our most important job is to remain vigilant to the next decline.

While we spend a lot of time trying to identify what’s really driving markets so our clients can be properly positioned, we also spend a lot of time identifying tactical, macro-based, fundamental opportunities that can help our clients outperform.

If you want research that comes with no long-term commitment, yet provides independent, value-added, plain-English analysis of complex macro topics, click the button below to begin your subscription today.

While we spend a lot of time trying to identify what’s really driving markets so our clients can be properly positioned, we also spend a lot of time identifying tactical, macro-based, fundamental opportunities that can help our clients outperform.

If you want research that comes with no long-term commitment, yet provides independent, value added, plain English analysis of complex macro topics, click the button below to begin your subscription today.

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