🥊 Stock Market Impact of Trump v Biden

Plus, 'roaring kitty' picks a new stock to back...

🥊 Trump & Biden Debate - What Impact Did it Have on the Stock Market?

🐝 The headlines have been buzzing with the recent Trump vs Biden debate, and many of you are likely wondering, ‘Will this have any impact on my investments?’ 🤔

Well, you’ve come to the right place as for this special edition of the Weekly Buzz, I’ll be breaking down the market impact of both the recent debates and the estimated impact of the overall election…

Let’s dive in.

🏆 First off, who won?

Across nearly every news channel, including CNN, CBC, Wall Street Journal, Vox, and many more, the headlines were similar:

As Vox put it:

If the debate ends with your own party debating whether you should quit the race, you lost.

Andrew Prokop, Vox

You can find plenty of recaps (like this one) walking through the numerous devastating moments for Biden where he loses his train of thought, is incoherent, and overall gives away his old age. 👴🏻

And while we’ll leave the politics to the other commentators, let’s take a look at how the market responded and how a Biden vs Trump presidency would impact our stocks.

📊 Overall market unphased, specific stocks hit hard

To set the scene, the stock market is doing exceptionally well this year, with the S&P 500 on track to finish the first six months up 15%.

This Friday (the day after the debate), the S&P fell ~0.4% in response to both the debate and inflation numbers, with inflation unchanged for June.

🔍 Looking at specific stocks and specific sectors, the impact of Trump’s debate win is more evident.

🏦 Financials and oil & gas both jumped on the prospect of lower regulation, seeing a +0.4% and +0.3% bump.

😰 But the biggest movers were the specific stocks that benefit from Biden’s green energy-focused Inflation Reduction Act, the Affordable Care Act, or Medicaid, such as First Solar (-9.8%), Oscar Health (-10.4%), and HCA Healthcare (-6.4%) to name a few.

🗳️ What Do Elections Mean for the Market?

If we take a step back and look at history, there are a few general takeaways for the stock market during the election year to keep in mind:

  • 📈 Election years have generally been good for the US stock market, with the S&P 500 rising in almost every election year since 1960.

  • 🌟 Gains are typically higher when incumbent presidents run for reelection as it reduces the uncertainty. This is the first election since 1892 with two incumbents.

  • 📝 Specific sectors are generally the hardest hit by the election results, so it’s important to understand the actual policy differences between each party to understand how the election will impact markets.

  • 🫏 At a high level, the following sectors would benefit from a Biden presidency: Clean Energy/EVs, Solar, Cannabis, and stocks with high China exposure

  • 🐘 The following sectors would benefit from a Trump presidency: Financials, Oil & Gas, Defence, and Cryptocurrency

💡 The US isn’t the only country undergoing an election. Both France and the UK have elections in the coming weeks and France’s political uncertainty has dampened market sentiment and activity.

🎢 Truth Social swings widely

Another big mover from the debates was Trump’s social media company, Truth Social ($DJT), which jumped 8% on Friday before falling 17%. Overall, the stock ended the week up 11%.

With Trump owning 65% of the company, the stock is undoubtedly tied to Trump and his success, and a Trump presidency would likely benefit the stock as investors believe it would become a bigger mouthpiece for the former president if he is re-elected.

Even so, the stock has been extremely volatile, regularly swinging double-digits up and down from day to day. The stock is widely distanced from any fundamentals and is in true ‘meme stock’ territory, as discussed in a previous Weekly Buzz, so invest with caution!

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🐶 Chewy Stock Surges 34% After Roaring Kitty Cryptic Post

The infamous ‘Roaring Kitty’ (aka Keith Gill, the 2021 man behind the GameStop craze) tweeted a picture of a dog and sent the Chewy stock flying up 34% before quickly erasing those gains… what ever happened to fundamental analysis? 🤦‍♂️

The irony is that Roaring Kitty didn’t even say anything about Chewy. He just tweeted a photo of a dog that somewhat resembles the Chewy logo 🤣

Some of this may be driven by Chewy’s strong connection to GameStop since GameStop CEO Ryan Cohen was the former CEO of Chewy, leading the company through PetSmart’s takeover and its initial public offering (IPO).

Chewy ($CHWY) is an online pet retailer with a ~$12B market cap.

🎙️ Top Discussions this Week

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