JPMorgan says that a Biden victory in November could be positive for stocks

REUTERS/Kevin Lamarque
  • “The consensus view is that a Democrat victory in November will be a negative for equities,” wrote JPMorgan analysts led by Dubravko Lakos-Bujas in a Monday note. “However, we see this outcome as neutral to slight positive.”
  • There are a number of factors that could make a Biden presidency positive for stocks, including a smaller-than-expected rollback of corporate tax cuts, infrastructure spending, softened tariff rhetoric, and an increased federal minimum wage.
  • In addition, JPMorgan wrote that “history suggests that challengers to an incumbent typically campaign at an extreme only to converge to the centre post-election,” meaning there could still be a shift in some policies.
  • Read more on Business Insider.

A Biden victory in November could be a good thing for stocks, even if the Wall Street consensus view is the opposite, according to JPMorgan. “The consensus view is that a Democrat victory in November will be a negative for equities,” wrote JPMorgan analysts led by Dubravko Lakos-Bujas in a Monday note. “However, we see this outcome as neutral to slight positive.”

There are a number of factors that could make a Biden presidency positive for stocks, according to the note.

“Given the current economic weakness, business recovery and job growth are likely to be prioritised over policies that could dampen economic growth and perhaps even jeopardize the desired 2022 midterm election outcome,” Lakos-Bujas wrote. “As such, the degree of corporate tax reversal may ultimately be lower than currently discussed.”

There are other policy proposals, including infrastructure spending, softened tariff rhetoric, and an increased federal minimum wage that should be “net positive for S&P 500 earnings and largely offset the corporate tax headwind,” according to the note.


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In addition, JPMorgan wrote that “history suggests that challengers to an incumbent typically campaign at an extreme only to converge to the centre post-election,” meaning there could still be a shift.

And, many of Biden’s proposed policy priorities were introduced in a healthy economy before the primaries and the worst of the COVID-19 crisis, meaning there may be further room for change, according to the note.

One of the biggest reasons that a Biden presidency could be bad for stocks is if the 2017 Tax Cuts and Jobs Act is reversed fully or partially. Goldman Sachs said in June that rolling back the TCJA would reduce its 2021 S&P 500 earnings estimate by $US20 per share to $US150.

Other firms such as Morgan Stanley see a wider range of possibilities that may still play out and could make different trades more attractive.

JPMorgan also included lists of stocks that could benefit from a Biden victory in November. The list includes Tesla,Nikola,Johnson & Johnson, CVS,Caterpillar,Apple, Facebook,Alphabet,Twitter, and more.

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