In the previous article Harris Leads Trump on Some Issues, Presidential Race Still Tight, we discussed how after Biden stepped aside for Harris, the Democratic ticket saw a surge in support, with Vice President Kamala Harris's approval ratings soaring and even overtaking Trump in key swing states, turning the tide for the Democratic Party in the 2024 presidential race. With the election so tight, US equity investors must closely monitor the policy platforms of the two potential presidents and how they could guide investment directions.
Energy
Harris places high priority on climate change (Democratic blue), viewing it as an urgent national and global challenge. The current Biden administration has taken steps to address climate change, including rejoining the Paris Agreement and pushing for a cleaner energy economy. Vice President Kamala Harris, as a key member of the administration, supports these policies and would likely continue to advance them under her leadership. Democratic policies tend to support renewable energy through investments and incentives, including subsidies or tax credits for solar, wind, and other clean energy technologies. For example, Enphase Energy, a US-based company with materials manufacturing operations, could benefit from these policies, boosting its growth and innovation. As a company focused on solar microinverters and energy management systems, it could gain from Democratic policies that lower production costs and enhance market competitiveness, accelerating solar technology adoption. Democrats view addressing climate change and developing clean energy as critical. They criticize the Trump administration for neglecting environmental issues and over-relying on fossil fuels. Democrats promise continued investment in clean energy R&D and job creation. They also plan to reduce energy costs by cutting pollution and strengthening environmental regulations, while eliminating unfair subsidies for oil and gas to promote fair competition and sustainable development.
Trump and Republicans support the fossil fuel industry (Republican red). During his tenure, Trump was skeptical of clean energy and climate protection, arguing these policies could harm US economic interests. His administration withdrew from the Paris Agreement, drawing international criticism. Republican energy policy aims to strengthen US energy independence by increasing production of oil and natural gas, reducing reliance on green energy to lower costs and curb inflation. Republicans also advocate canceling renewable energy investments, speeding up permits, easing environmental regulations, and extending tax breaks for oil and gas companies to boost traditional energy competitiveness. This approach could negatively impact alternative energy stocks by weakening their growth momentum and market appeal.
Finance
Democrats propose expanding government investment to strengthen social safety nets. They emphasize active government intervention to promote economic growth and social equity, including large-scale investment in infrastructure and manufacturing to upgrade industries and create jobs. Democrats also aim to strengthen the middle class by raising wages and improving labor laws. They support small businesses with funding and tax breaks, expand child tax credits and other tax cuts to ease family financial burdens. In healthcare, they support expanding Medicaid to reduce medical debt, and provide down payment assistance and tax breaks for first-time homebuyers.
Republicans favor tax cuts and reduced government intervention to stimulate growth. Their policies include tax cuts, lowering housing and education costs, and strengthening Medicare. Republicans emphasize controlling federal spending by cutting waste to promote growth, though this may mean less fiscal expansion than Democrats. However, large-scale tax cuts could negatively impact revenue, increasing the federal deficit. Overall, while the two parties differ in fiscal spending control, the combined result likely points to higher federal deficit ratios.
Immigration
The two major parties hold starkly different positions on immigration. Republicans tend to be conservative, advocating stricter immigration controls and deporting illegal immigrants to protect traditional working-class interests. They support restoring Trump-era border policies, accelerating border wall construction, and enhancing border surveillance and enforcement to safeguard their base.
In contrast, Democrats take a more inclusive stance, advocating to fix and improve the immigration system. They view immigrants as contributing to the US economy by providing cheap labor that helps curb inflation. Democrats propose expanding legal immigration pathways while cracking down on illegal activities like human trafficking and drug smuggling, balancing the interests of natives and immigrants to win over minority voters.
Monetary Policy
(Source: CNN)
Trump initially suggested he wanted the president to influence Fed policy independence. He later clarified his remarks, saying anyone can comment on interest rates, including the president. In a Bloomberg interview, he said: "I think the president can talk. It doesn't mean they have to listen. I said a lot about rates with Fed Chair Jerome Powell when I was president, and it may or may not have had an impact. The president can certainly talk about rates because I think I have good instincts. That doesn't mean I'm giving orders, but it does mean I should have the right to talk about it like anyone else." Harris immediately took the opposite stance, supporting Fed independence and opposing Trump's comments.
Trade Policy
Trump advocates protectionism, supporting tariffs on foreign-made goods and pushing to revoke most-favored-nation status for certain countries to better balance trade, which could affect multinational stocks and international trade. Harris supports open trade, promoting mutual development for the US and global economy. In a 2019 Democratic debate, she declared she is "not a protectionist Democrat." Harris views US-China trade relations as "complex" and says China should be held accountable. She believes China unfairly uses US intellectual property and will address this. Harris also mentioned protecting US jobs by creating a favorable trade environment to "export US products, not jobs" (Source: China Ministry of Commerce).
This article mainly highlights areas where the two parties' policies differ significantly. Other aspects, such as China policy, Indo-Pacific strategy, and support for Israel, are not elaborated here. Republicans and Democrats are expected to schedule the first televised debate between Trump and Harris in September. This debate could significantly impact the candidates' standings, as voters will judge their performance. Market trades associated with the candidates—the so-called "Trump trade" and "Harris trade"—may fluctuate based on the debate outcome, affecting markets. Investors may adjust their strategies accordingly, anticipating that the debate could change the market's assessment of each candidate's winning probability.
Risk Warning: This content is for reference only and does not represent investment advice. Markets are risky; invest with caution.
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