Investors may want to start imagining a red broom sweeping a parking lot when plotting their portfolio into November's presidential election, say some experts.
In other words, prep for a fall Republican sweep.
"I think it is [a sweep]," Stifel chief Washington policy strategist Brian Gardner told Yahoo Finance executive editor Brian Sozzi on his Opening Bid podcast (video above), should President Joe Biden step aside and former President Trump continue to gain goodwill following his near assassination.
A Republican sweep could be defined as Trump winning the White House again and the Republicans controlling both the House and Senate.
"I think the chances of Republicans winning the Senate were always pretty good," continued Gardner. "And the situation coming out of the debate a couple of weeks ago with President Biden is probably going to tamp down Democratic enthusiasm and turnout, and that could hurt some Senate candidates. I think the House was always a little bit more in question. There was a legitimate scenario, a reasonable scenario where Democrats could flip the house even if Trump won. I think that's becoming less realistic."
A week ago, an assassination attempt on Trump at a rally in Pennsylvania left one dead and two critically injured. Trump, whose ear was injured, has rallied in time to participate in this week’s Republican National Convention. His poll numbers have risen following the incident.
On the flip side is Biden, who was just diagnosed with COVID-19 this week and is facing growing pressure from his party to step aside.
There is now plenty of curiosity about how markets could fare under a second Trump presidency in light of the wild few weeks in the political news cycle.
Investors have reason to be upbeat on Trump 2.0.
First, there is history of markets doing well under Trump. The S&P 500 went up 70% during his term, while the Dow Jones Industrial Average was up 57%.
CJ Lawrence portfolio strategist Terrence Gardner Jr. thinks Trump's tax cuts will be extended in 2025, giving a boost to companies and households.
Other experts Yahoo Finance spoke to suggest Trump's tough hand on illegal immigration may free up job opportunities for US citizens.
Meanwhile, Trump says he will bolster domestic energy drilling in an effort to bring down inflation.
That should be a tailwind to industrial companies, Gardner says.
However, higher tariffs and an escalating trade war with China can add pressure to inflation, just as interest rate cuts are coming into view. Higher labor costs may also impact prices, though Trump has claimed restricting immigration can lower inflation.
Regardless of sweeps or wins, there’s a “surprising amount of commonality between what Biden and Trump can get done in a second term,” said Stifel's Gardner, describing each candidate’s impact as “different shades of gray but essentially the same outcome.”
Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled, market-focused conversations and chats with the biggest names in business on Opening Bid. Find more episodes on our video hub. Watch on your preferred streaming service. Or listen and subscribe on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
In the below Opening Bid episode, longtime Trump economic adviser Stephen Moore takes us inside the economic roadmap for another Trump presidency.
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