Stocks that would benefit from Republican policies have been moving higher, signaling that traders expect the GOP may have stronger odds of taking both houses of Congress. Dan Clifton, head of policy research at Strategas, constructed Republican and Democratic portfolios, which include investments that would have the most to win or lose based on the election outcome. The portfolios are a diagnostic tool used to gauge how financial markets view the Nov. 8 election. Democrats currently control the House of Representatives, and they have an edge in the evenly split Senate because Vice President Kamala Harris can cast a tie-breaking vote. “Our baskets through [Thursday] showed a 68% chance of a Republican sweep,” said Clifton. “The big drivers here are energy; health care, in particular biotech and pharma; financials, particularly insurance, and defense. Those are the four big areas that are really moving this thing.” The Energy Select Sector SPDR Fund , XLE, for instance is up 2.4% in the past week. The Strategas Republican portfolio contains a number of energy companies including Cheniere, Centrus Energy , Enterprise Products and ConocoPhillips. Clifton said Republicans would support more oil and gas production. Defense companies in the GOP portfolio include Northrop Grumman and Lockheed Martin . Northrop is up more than 11% since Sept. 30, and Lockheed has gained 24.7% in that period. Meanwhile, the iShares Biotechnology ETF is up 9.7% since Sept. 30. The Republican portfolio contains Regeneron , up 7.5% since the end of September, and Bristol-Myers Squibb, up 10.8% in that same period. Clifton said the Republican portfolio bottomed out around Sept. 7, and in October it pulled ahead. “There’s more confidence the Republican House gains are going to be quite large,” he said. “That’s a big enough majority where the House is probably going to stay Republican in the 2024 election. The probability of a Democratic sweep looks less likely from these election results.” Clean energy stocks have been underperforming. The Democratic portfolio holds First Solar and ChargePoint. ChargePoint is down 14.9% since the end of September, but First Solar is up 16%. “If the consensus is wrong and the Democrats keep the Senate, the sector that will have the most upside is the clean energy sector,” he said. The iShares Global Clean Energy ETF, ICLN, is up 1.5% in the past week, but has gained only about 0.4% since Sept. 30.
Sumber: www.cnbc.com
