It’s coming down the wire.
In just four months, Donald Trump or Hillary Clinton will be elected the next president of the United States. And there’s only one certainty – it’ll be a nail-biting fight to the finish.
At the moment, about 43% of registered voters say they support Clinton.
About 40% say they want Trump to be the next president. That leaves about 17% undecided.
And while the latest market rally may be an indication that Clinton will clinch the ticket, don’t place your bets just yet.
Since 1928, U.S. stocks have correctly predicted who would win the Oval office 19 out of 22 times. When stocks are higher in the months prior to the vote, the sitting party has won about 86% of elections. But again, don’t place your bets.
The race has become too close to call.
We must remember that despite record market highs, markets have been divorced from economic realities for quite some time, helped in large part by near-zero interest rate policies and overly accommodative central banks.
While we’ll leave our political opinions to the side (they have no place here), we wanted to point out what each candidate has in store for the economy moving forward.
This week, let’s begin with Donald Trump.
In accepting the Republican nomination the other day, Trump promised to be “the voice” of disenfranchised Americans who feel they’ve been economically railroaded, painting a grim, yet realistic state of U.S. affairs, instability aboard and crumbling infrastructure in the country.
In fact, talk of updating infrastructure has helped stocks like Vulcan Materials (VMC) – which has more than doubled since a January 2016 low.
If we see a move to increase spending on roads, bridges, pipes and highways, producers of construction aggregates – like VMC – would flourish.
Trump also promised to be a “law and order” president after a string of attacks on the police., and pitched his plan to build a wall along the U.S.-Mexican border.
That “wall” plan is part of the reason cement stocks, like Granite Construction (GVA) and Mexican cement company, Cemex (CX) are up an average of 24% in recent weeks.
Think about it. To build a 2,500-mile wall, it could cost $15 billion to $25 billion.
The presidential nominee also discussed rewriting trade agreements, including the North American Trade Agreement (NAFTA), cutting taxes and creating new jobs, but we didn’t hear much on how that would be achieved the other night.
So, it’ll be interesting to see what the plan is.
For some history, when NAFTA was signed, the hope was that it would expand U.S. exports, create jobs, and allow the economy to reap benefits of globalization. Instead, NAFTA has been deemed a disaster, as Americans are forced to compete with lower-wage workers.
Four million manufacturing jobs have been lost to date.
When it comes to Trump’s plans for tax reform, if you are single and earn less than $25,000 and jointly earn less than $50,000, you will not owe income tax at all.
Other Americans would get simpler tax codes with brackets ranging from 0% to 25%.
In addition, no businesses would be required to pay more than 15% of their business income in taxes. And finally, the death tax would be eliminated. Reducing or cutting deductions and loopholes available to the rich, as well as reducing or cutting corporate loopholes that cater to special interests would pay for that plan, according to Trump’s site.
He’s also promised to repeal and replace ObamaCare. A successful repeal of the law could make healthcare stocks a bit more volatile moving forward.
Overall, Trump’s appeal is deep rooted in his rhetoric.
The Mexican wall may be unrealistic at the moment, but it’s exciting for his voters.
While it’ll be interesting to hear how these plans can become reality, what’s driving a great deal of excitement among voters is Trump’s promise to fix America.