Harris trade might take time to kick off if she wins in two weeks
Plus, when the hot money goes against green; and, a massive lithium deposit discovered in Arkansas
In today’s edition:
— Harris trade might take time to kick off if she wins in two weeks
— What it means when the ‘hot money’ goes against green stocks
— Massive lithium discovery in Arkansas could change U.S./China clean energy battle
— UN’s biodiversity summit opens in Colombia with call for cuts to debt for small countries
— Bad news for bears as melting ice and warmer oceans destroy food chain in Arctic Circle
— Crew of 12 completes 115-day (and night) traverse of Northwest Passage, once unthinkable
It was past midnight on Election Night 2016 when the first headlines flashed across the nation declaring Donald J. Trump the next president, and those of us watching the markets saw S&P 500 futures promptly tank 700 points as investors around the world sold off. By the time I made it to my office at TheStreet Inc. — only yards from the New York Stock Exchange — it was almost dawn and the market had recovered and was up hundreds of points.
No such whiplash is expected this time as investors know fully well what each candidate offers. But if Vice President Kamala Harris wins two weeks from today it is unlikely we’ll see a major short-term rally. With markets already at record highs, it’s more likely investors will initially consolidate gains as they fret about Democratic spending and inflation, a potential split Congress, and of course the inevitable Trump challenge to the results.
As reality sets in though, a couple of themes will kick into place that should guide continued gains as we move closer to the end of the year. Last week we looked at the impact a Trump victory might have. Oil, defense, banking and tech stocks mostly.
Harris would bring another dynamic. Healthcare stocks, consumer and homebuilding shares. And importantly, clean energy. Renewable energy stocks have been in a pronounced bear market for more than two years now, victims of higher rates and supply chain woes despite President Joe Biden’s signature climate law, the Inflation Reduction Act.
As billions of federal dollars from that act start flowing, stocks in wind, solar, battery, and energy efficient companies are expected to stage a rebound, especially now with a lower rate environment. Think companies such as First Solar FSLR 0.00%↑ and NextEra Energy NEE 0.00%↑. Also, electric vehicle stocks, such as Rivian RIVN 0.00%↑ and the bigger automakers who are starting to see rebounds in EV sales, such as General Motors GM 0.00%↑ and Ford F 0.00%↑. Finally, infrastructure stocks could rise as Harris continues spending from the Biden era on manufacturing and infrastructure repairs, so companies like Caterpillar CAT 0.00%↑ and Nucor NUE 0.00%↑.
One sector that might not benefit as well is tech, which could impact the overall market, given the weighting of some of the tech giants on the indexes. Though Harris is from San Francisco, adjacent to Silicon Valley, and knows the community well, she is expected to keep up the regulatory pressure on Big Tech. That will extend to the industry’s surging demands for more power to fuel data centers for AI. There is an energy crunch coming, and if government gets involved as it inevitably will, that could slow the growth of some of the bigger AI plays, such as Nvidia NVDA 0.00%↑ or Advanced Micro Devices AMD 0.00%↑.
Investors hate surprises. While the stated positions of the candidates should spell out what to expect depending on who wins, the uncertainty is really around how and when will we know who won.
Despite the market’s recent gains, investors are holding off on pushing for a year-end rally until they get a definitive answer (more on that below). The good news is that we are getting closer to that day. It just might not be Nov. 5.
Don’t forget to contact me directly if you have suggestions or ideas dcallaway@callawayclimateinsights.com.
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What it means when the ‘Hot Money’ goes against green stocks
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