Inside Secrets: How to Profit from Trump or Harris's Economic Agenda
As the 2024 presidential election looms, investors are grappling with the divergent economic visions of President Donald Trump and Vice President Kamala Harris. Their contrasting policies on taxes, trade, energy, and regulation have the potential to create seismic shifts across sectors and asset classes.
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The tax plans from Trump and Harris have taken center stage ahead of their first presidential debate on Tuesday. Here's a look at their dueling proposals and potential market impacts:
Trump's "Make it in America" Corporate Rate
In a major economic policy speech, Trump doubled down on his "America First" agenda, proposing to slash the corporate tax rate from 21% to 15% - but only for companies that manufacture products in the United States. His plan aims to incentivize "re-shoring" by denying the lower 15% rate to any firm that "outsources, offshores or replaces American workers."
While light on details of how it would be implemented, analyses suggest this two-tier corporate tax system could reduce federal revenues by $200 billion to $673 billion over the 2026-2035 period compared to the current flat 21% rate. However, Trump argues it will turbocharge domestic investment and production.
Potential big winners from Trump's carrot-and-stick approach include U.S.-based industrial manufacturers, construction material suppliers, and companies in the textile, appliance and machinery spaces leveraged to American factories like Nucor (NUE), Stanley Black & Decker (SWK), and Whirlpool (WHR).
Harris's Corporate Tax Hike
In contrast, Harris supports raising the corporate tax rate to 28% from 21% currently, which could generate $1 trillion to $1.2 trillion in new tax revenue over the next decade. She's also pitched quadrupling the tax on stock buybacks to encourage investment over financial engineering.
Additionally, Harris backs a 25% minimum tax on wealthy households with over $100 million in wealth that would hit their unrealized capital gains. This "billionaire minimum income tax" could raise $500 billion through 2035, though critics like billionaire Mark Cuban warn taxing unrealized gains is misguided and could "kill the stock market."
Sectors that could get whacked by Harris's tax hikes include big tech facing antitrust scrutiny, oil/gas firms contending with environmental regulations, and companies relying heavily on stock buybacks to boost shareholder value.
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What the election means for AI stocks
If you think AI stocks are hot right now, just wait until after the election. I believe the next president's first move could launch a second wave of AI winners.
Of course, with any shift in economic policies, there are also strategies to hedge risk exposure or potentially profit from volatility spikes:
Shorting anti-ESG offenders - Harris could weaponize regulation against fossil fuel producers, private prisons and companies with poor environmental/social/governance track records.
Big Tech volatility hedges - Increased scrutiny of FAAMG firms from Trump or Harris over data privacy and "censorship" claims could weigh on share prices. Options strategies offer potential to profit from volatility spikes.
Trade policy whiplash - Investors may want to implement protective strategies like currency hedges and managed futures to mitigate chaos whether Trump escalates trade wars or Harris recalibrates with allies.
No matter which candidate emerges victorious in 2024, their opposing economic philosophies centered on Trump's tax carrot for domestic investment and Harris's tax stick on corporations and the wealthy ensure significant upheaval. Those who can see around the policy corners may find the real gems await over the next four years.
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