On Sunday, Eastern Time, Donald Trump, the Republican presidential candidate, once again faced a dangerous moment as he encountered a 'suspected attempted assassination' at his golf club in West Palm Beach, Florida. This incident marks the second attack on Trump in the past two months.
According to data from the Polymarket website at the time of writing, the market predicts that Trump and Harris have an equal chance of winning.
As the US election enters a heated phase, polls have become an important indicator for media outlets to predict the election results.
US election analysts have discovered that if you want to know who will be elected as the US president next year, there is a more direct and accurate source of judgment than polls - the US stock market.
According to a report by Fortune, senior election analysts at FiveThirtyEight analyzed hundreds of polls from previous US elections since 1998 and found that the probability of accurately predicting the winner through polls is only 78%.
On the other hand, since 1984, the accuracy of the US stock market in predicting the US presidential election has reached a staggering 100%.
Analysts have found that since 1984, as long as the S&P 500 index rises accumulatively between August and October, the ruling party will win the election; on the contrary, if the S&P 500 index drops during this period, the challenger will win.
In their report, John Lynch, Chief Investment Officer at LPL Financial, and Matthew Anderson, Senior Analyst, give a simple explanation for the correlation between stock prices and election results.
The stock market performance reflects a broader economic sentiment. When voters are satisfied with the direction of economic development, they tend to support the status quo, but when they are dissatisfied, they are more inclined to vote for change.
Analysts also pointed out that although the strong stock market performance in the entire year before the election is highly correlated with the success of the ruling party in the election, it is not always a guarantee of success. In 1976 and 1980, the S&P 500 index rose by 14.1% and 13.4% respectively, but in these two years, with high inflation rates, the ruling party lost the elections.
Therefore, in addition to the US stock market, analysts have also found another election forecast indicator worth paying attention to: the "misery index."
The misery index combines seasonally adjusted unemployment rates and annual inflation rates into one indicator, aiming to measure the economic pain felt by ordinary Americans. The higher the number, the more difficult consumers feel about rising prices and finding jobs, leading to more economic "pain."
Statistics show that since 1980, the misery index has also achieved a 100% accuracy rate in predicting each presidential election.
During the period from August to October of each election year, the three-month moving average of the misery index can accurately predict the election results: as long as the misery index rises, the ruling party will be defeated; vice versa.
Currently, the misery index for the US in August is 6.73%. Although this is far lower than the peak of 12.66% during the Biden administration in July 2022, it is still higher than the 6.57% in June.
This means that the unexpected rise in the unemployment rate in July poses a potential threat to Vice President Harris's chances of winning.
How to trade the US election?
As an investor, what changes can we expect in the capital markets if either Trump or Harris comes out on top?
Zheshang Securities believes that whether it is the 'Trump trade' or the 'Harris trade', they are essentially forward-looking reactions of the market to the potential economic impact of their future governing policies, which are closely related to their policy agendas.
Jefferies, a well-known Wall Street investment bank, has analyzed the policy proposals of Trump and Harris and the potential impact of these policies on different industries and companies.
Under the 'Trump trade', Trump will continue his relatively tough immigration policy, advocate for trade protectionism and tariffs, support ending the war in Ukraine as soon as possible, advocate for tax cuts, and support traditional energy and technological innovation, among other things. Jefferies has identified stocks that are expected to benefit under the 'Trump trade':
Bullish: $AGCO (AGCO.US)$Please use your Futubull account to access the feature.$Deere & Company(DE.US)$Please use your Futubull account to access the feature.$US Steel (X.US)$Please use your Futubull account to access the feature.$ConocoPhillips (COP.US)$N/A.$Norfolk Southern (NSC.US)$Please use your Futubull account to access the feature.$ebay(EBAY.US)$ Please use your Futubull account to access the feature.$Etsy Inc(etsy inc)$ fell 1%, and Amazon's stock price extended its gains. The stock price of PDD Holdings fell 1.3%, while Etsy's stock price remained roughly flat.N/A.Microchip Technology (MCHP.US).Please use your Futubull account to access the feature.Investors who only hold long positions are overallocated in stocks including Microchip Technology, On Semiconductor, Texas Instruments and Qualcomm (QCOM.US), while hedge funds are most overallocated in stocks including Teradyne, Qualcomm, Micron (MU.US), Cadence Design Systems, and Qorvo.Please use your Futubull account to access the feature.Affirm Holdings.Please use your Futubull account to access the feature.Amgen (AMGN.US)Please use your Futubull account to access the feature.$British American Tobacco (BTI.US)$N/A.Altria Group (MO.US) Please use your Futubull account to access the feature.bought more shares of Discover Financial Services (DFS.US)Please use your Futubull account to access the feature.$Enova (ENVA.US)$ 、 $Goldman Sachs (GS.US)$Please use your Futubull account to access the feature.$Morgan Stanley (MS.US)$Please use your Futubull account to access the feature.$JPMorgan (JPM.US)$Please use your Futubull account to access the feature.$Vertex Pharmaceuticals(VRTX.US)$Please use your Futubull account to access the feature.$Ford Motor (F.US)$Please use your Futubull account to access the feature.$General Motors (GM.US)$.Please use your Futubull account to access the feature.Merck (MRK.US)Please use your Futubull account to access the feature.Regeneron Pharmaceuticals (REGN.US) And other companies;
Previously, the bank also listed bearish stocks: Analog Devices (ADI.US)Please use your Futubull account to access the feature.Albemarle (ALB.US)Please use your Futubull account to access the feature.Progressive (PGR.US) Please use your Futubull account to access the feature.$te connectivity(TEL.US)$Please use your Futubull account to access the feature.$HCA Healthcare(HCA.US)$Please use your Futubull account to access the feature.$Barrick Gold (GOLD.US)$ Please use your Futubull account to access the feature.Google-A (GOOGL.US) also had two splits, the most recent being in 2022. Nvidia is about to undergo its sixth split since 2000.Please use your Futubull account to access the feature.$Meta Platforms (META.US)$ According to documents filed with the U.S. Securities and Exchange Commission (SEC), some of the most prominent actions Third Point took in the second quarter, respectively, were to establish positions, shareholding of and more.
Harris advocates for tax increases, a cautious attitude towards technological innovation, support for the new energy industry, a cautious stance towards the technology industry, or a shift towards "balance," a more proactive policy in housing security, a commitment to expanding government healthcare plans, and support for teacher salary increases. Jefferies has outlined the stocks expected to benefit from Harris' presidency.
Bullish: $Teva Pharmaceutical Industries (TEVA.US)$Please use your Futubull account to access the feature.CrowdStrike (CRWD.US)Please use your Futubull account to access the feature.$Palo Alto Networks$.Please use your Futubull account to access the feature.$cleveland-cliffs (CLF.US)$Please use your Futubull account to access the feature.Nucor (NUE.US)Please use your Futubull account to access the feature.At the same time, the fund increased holdings in five stocks in the second quarter, including increasing its holding of Technology stocks from 0.5 million shares to 2.1 million shares, and increasing its holding of Cinemark shares from 5 million shares to 7 million shares, and increasing its holding of Taiwan Semiconductor shares from 1.18 million shares to 2.03 million shares.Please use your Futubull account to access the feature.BHP Group LtdPlease use your Futubull account to access the feature.$te connectivity(TEL.US)$Please use your Futubull account to access the feature.$First Solar (FSLR.US)$ And other companies;
Previously, the bank also listed bearish stocks:$Costco (COST.US)$Please use your Futubull account to access the feature.$Hershey (HSY.US)$Please use your Futubull account to access the feature.$Kellanova (K.US)$Please use your Futubull account to access the feature.Procter & GamblePlease use your Futubull account to access the feature.Including major retailers such as Target, retailers launched promotional shopping activities throughout July, attracting customers by providing huge discounts and competing with Amazon's sales activities.Please use your Futubull account to access the feature.$Walmart (WMT.US)$andAdobe (ADBE.US)Please use your Futubull account to access the feature.bought more shares of Discover Financial Services (DFS.US)Please use your Futubull account to access the feature.Google-A (GOOGL.US) also had two splits, the most recent being in 2022. Nvidia is about to undergo its sixth split since 2000.Please use your Futubull account to access the feature.$Goldman Sachs (GS.US)$Please use your Futubull account to access the feature.the cigna groupPlease use your Futubull account to access the feature.$CVS Health (CVS.US)$Please use your Futubull account to access the feature.Advanced Micro Devices (AMD.US)Please use your Futubull account to access the feature.$Broadcom(AVGO.US)$ According to documents filed with the U.S. Securities and Exchange Commission (SEC), some of the most prominent actions Third Point took in the second quarter, respectively, were to establish positions, shareholding of and more.
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