Hot, hot, hot — or Not? a climate stock Crystal Ball as Trump and Harris Come down to the wire

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With the U.S. stock market soaring to new record highs all year, investors are suitably concerned about who wins the presidential election next month to see if the rally can be extended.

Both Vice President Kamala Harris and former president Donald Trump offer different enticements for investors, which we will explore, and both come with challenges.

The first thing investors need to remind themselves is that presidents are often the victims of natural or geopolitical circumstances that can affect the markets, such as the collapse of Lehman Brothers in 2007 or the European monetary crisis of 2011. Or Covid.

Another thing to remember is that the current bull market just finished its second year, or 24 months of gains. Average bull markets run between 24 months and 61 months, or five years.

So based on historical trends, the current bull market will run out sometime during the next president’s first term. The interest rate cycle, currently just starting downward after two years of rising rates, will not likely last for four years, so that is something else to consider. And Fed President Jerome Powell’s term ends in just two years, which throws another wrench into the mix.

The impact of global warming is also getting steadily worse, so President Joe Biden will be the last president who has the luxury of having to decide whether to deal with it or not. Whoever comes next won’t have a choice.

But presidential policies can and do play a role in affecting certain stock sectors, and that’s where investors should focus their attention as the Nov. 5 election nears. Trump is clearly an energy and defense play, as well as crypto, while Harris would be a boon for healthcare and clean tech stocks. Both will likely bolster the defense industry, given the state of things in the Middle East.

The distinctions will become even more pronounced over the next few weeks as the election nears. In the following two weeks, we will look at each candidate and what they bring to the table, what these trades are, and what savvy climate investors can expect starting Nov. 6. First up, and below, Trump.

Climate stocks and the Donald Trump market chaos theory
Former President Donald Trump likes to keep everybody guessing, and that’s just what U.S. stock market investors can expect from a second Trump presidency should he win on Nov. 5.

While it’s handy to point to the market gains in his first term from 2016 to 2020, the next four years will be a different era, with global warming, an AI arms race in tech, and an increasingly hostile China focused on building economic monopolies from South America to Europe, from clean energy to electric vehicles. All are new challenges from last time.

Much has been said about Trump’s potential for tearing down Biden’s efforts to build a clean tech economy, particularly investments from the Inflation Reduction Act, which has put tens of millions into U.S. manufacturers, many in red states.

To Trump, this is not a demolition derby so much as a rebranding exercise. While he won’t tolerate climate change or environmental, social and governance (ESG) jargon, he will certainly maintain and build on manufacturing gains and innovation. Just in the name of energy security, rather than climate mitigation. In his post-truth world, energy security IS dealing with climate change.

Stocks expected to perform well under a Trump presidency include the oil and gas companies, such as Exxon and Chevron, the
defense companies, such as Northrop Grumman and Lockheed Martin; the banks and tech companies looking for less regulation, perhaps JPMorgan Chase, Goldman Sachs, and Apple.

Finally, the traditional auto companies, such as Ford and GM, and don’t forget Tesla.

Clean tech will certainly be part of this mix as lower rates for at least the next few years benefit borrowing costs for young startups and equipment heavy solar and wind companies. In the name of energy security, everything goes. Think of GE Vernova or Constellation Energy. The smaller companies may suffer from cuts in government subsidies and borrowing programs, but energy is going to be an issue Trump cannot avoid.

In short, Trump can be expected to cause complete and utter chaos if he wins, all in the name of building his power. But he’s always been a fan of business, and fancies himself the ultimate entrepreneur. Those are two things that investors can definitely count on, if nothing else.