A Big Wind Blows
Already it appears that the stock market, one of the most successful forecasting tools on the planet, has begun betting on a second Bush presidency. The sorts of stocks that should prosper in his administration have begun to surge in recent weeks along with his poll numbers.
The mid-August turnaround in the market seems to have coincided neatly with the turnaround in Bush's re-election chances and with Hurricane Charley. It's as if a big wind blew away voters' and investors' memories of unkept promises, from job growth to the capture of Osama bin Laden, and reset the chessboard for a new game.
If Wall Street really is ready to forgive and forget on issues ranging from drug reform to the budget deficit, how will we see it in the stock market? Or conversely, how will we see in equities that Kerry is gaining? By observing the names that are bid up and those that are tapering off.
Let's take a speculative look at Bush-bet sectors and how they stack up vs. Kerry crusaders.
The best bets in favor of Bush are -- duh -- ones in favor of dividend-paying stocks, energy and basic materials.
The reason for the first group is tax policy: The elimination of so-called double taxation on certain dividends pushed by the Bush administration would probably be one of the first fiscal policy initiatives reversed by a new Kerry administration. (REITs and foreign dividends for instance don't receive the lesser tax burden.) If investors thought that dividend-paying companies were about to have their big tax benefit kicked away, they would start selling them now. Instead, qualified dividend payers, like banks, have been on a tear.
Energy is an obvious Bush choice because he is the prince of the oil patch and drillers would continue to have an operational field day in a second Bush administration. But basic materials, such as chemical manufacturers and forest products companies, should also see their fortunes improve as environmental regulations are recklessly loosened, lowering the cost of doing business. They may also finally see asbestos liabilities cleared away in a more sympathetic, devil-may-care second term.
It's pretty hard to pinpoint stock groups that would prosper under Kerry, but we can guess that if the champion of the downtrodden fulfilled his promise to create more jobs, the money would filter down to the recently trashed small discount retail chains.
Also, on the other side of his psychosocial spectrum, we'll give him the latte and white-wine stocks, as well as ones representing his major backers in Hollywood and the big media. Plus you've got to give him at least one French stock.
He also gets
because I noticed on a campaign contribution report that one of its top executives was a leading donor to the Kerry campaign.
Of all these, the most attractive long-term ideas are the discount variety stores like
, as they're currently most unloved and disrespected. I'll watch all of these in the next two months.
If you'd like to offer your views of which sectors to track for Bush and Kerry,
send me an email
with the word "campaign" in the subject field.