Due to the weak US non-farm data announced last Friday, US stocks fell in response. The S&P 500 fell more than 1.7%, and the weekly decline of more than 4% was the largest weekly decline in a year and a half.

In addition to concerns about economic recession, the uncertainty of the US election also puts pressure on US stocks.

At 9:00 am this Wednesday Beijing time, presidential candidates Trump and Harris will hold the second debate of the 2024 election in Philadelphia. This is also the first face-to-face confrontation between Harris, who replaced Biden as the Democratic presidential candidate, and Trump, the Republican presidential candidate.

How will the debate proceed?

According to Minsheng Securities, the debate will be a 90-minute televised debate at 9pm local time on September 10. There will be no audience on site, and the microphone of the other party will be muted when one party is speaking.

Harris had previously requested that the microphone be turned on throughout the debate (to expose Trump's character flaws), and on September 5th, she agreed to the mute rule. The two sides may have another debate in October, but there is currently no specific arrangement.

In terms of debate topics, it is expected to be similar to the debate between Trump and Biden on June 27, focusing on domestic economic policies, including inflation, corporate and personal taxes, housing, immigration, and other issues. How Harris, who lacks policy experience, will respond is a major focus.

What does the market care about the most?

According to the media's forecast, in Wednesday's debate, Harris and Trump may clash on inflation, tariffs, and taxation.

Trump's economic policy focuses on imposing tariffs, calling for 10% to 20% tariffs on all foreign goods, as well as basic tariffs on all foreign-manufactured goods, while Harris advocates restrictive tariffs, continuing a moderate trade policy and a technical "small yard high wall."

Economists have analyzed that the proposal to raise tariffs has a "disadvantageous" impact on economic growth, and will lead to increased inflation. An analysis by the Peterson Institute for International Economics shows that the price hike from Trump's tariff system will result in an average American household spending an additional $2600 per year.

In addition, the issue of taxation is also a major topic. Both parties consider tax cuts as a campaign strategy, but differ in direction when it comes to increasing or reducing corporate taxes.

Harris advocates "Rewarding Work, Not Wealth," raising the corporate tax rate from 21% to 28% (Trump's 2017 legislation reduced it from 35% to 21%) and increasing the minimum tax rate; Trump's tax reduction policy is more direct and singular (comprehensively continuing tax benefits for companies and individuals), and plans to reduce corporate taxes.

Moreover, Trump's tax reduction policy introduced in 2017 will expire next year, so the next president will have to decide whether to continue this policy.

GF Sec also added that in terms of housing policies, Harris's policy plan is more aggressive, advocating for a substantial increase in supply while subsidizing demand, whereas Trump's promotion of housing subsidies is very limited.

In terms of energy policy, Harris hopes to increase investment in new energy and subsidy projects to increase the proportion of clean energy. Trump, on the other hand, claims that if he is elected to the White House again, he will consider canceling the federal tax credit of up to $7,500 for electric vehicles.

Overall, Harris is more aggressive in domestic economic policy, while Trump is more aggressive in foreign economic policy.

"Trump Trade" vs. "Harris Trade"

GF Securities pointed out that the differences in policy positions between Harris and Trump (such as corporate tax policy and energy policy), as well as the differences in the impact on related industries under different circumstances, are the most clear parts that distinguish "Trump Trade" from "Harris Trade" in the financial market.

In terms of the subsequent impact, the policy positions of both individuals will bring risks of inflation and upward deficits, and there is still uncertainty about the impact on economic growth. Trump's trade policy may have a bearish effect on non-US assets.

Impact on inflation: Harris's anti-inflation policies are more comprehensive, but there are practical operational issues, and the stimulation of the housing market particularly implies inflationary factors; Trump's policies are more focused, but policies on trade and immigration can also bring uncertainty to inflation.

Impact on government deficits: Both Harris and Trump's policies point to higher deficit rates, with the former being relatively more controllable.

Impact on economic growth: The impact of the policies of both individuals on the nominal growth rate is uncertain, so the market is relatively more sensitive to the actual monetary policy of the Federal Reserve in terms of total pricing. In terms of structure, Harris's policies are relatively favorable to new energy, real estate, and consumer goods.

Impact on non-U.S. assets: Trade policy may be a key differentiator, with Trump's presidency potentially bringing short-term concerns about the trade environment.

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The first debate between Donald Trump and Kamala Harris is about to start! Mooer, welcome to book a viewing~

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