Presidential Election Stock Market Effects for an Obama Versus Romney Win

The blue battles the red with only 29 days remaining until the country decides the next President of the United States. If President Obama is reelected, the status quo is in place, Obamacare is here to stay, more money will likely be spent on solar and alternative fuels, and the oil, coal and natty gas industries will be ignored. If Governor Romney is elected, Obamacare will be repealed and replaced, the solar and alternative fuels will receive less funding, and the oil, coal and natty gas industries will thrive. The natty gas renaissance would finally begin in earnest. The general guidelines below serve as a road map as the markets move from October into November.

IF OBAMA WINS:

·         Obamacare would remain as the law of the land so hospitals and medical device companies such as HCA, HMA, THC, CYH, LPNT, UNH, ISRG, CERN and MASI should bounce.  Insurers and HMO’s such as CI, AET and WLP should sell off.  ESRX should remain elevated. Big pharma such as PFE, MRK and JNJ should benefit since prescription drug use would increase.

·         Dividend stocks should sell off since traders will worry about the tax increases to capital gains coming. This action would be unfavorable to the broad indexes.

·         The repatriation tax rules will remain in limbo and a less friendly tone should be set for repatriation.  So stocks with large cash holdings overseas should be hurt or stuck in a malaise such as MCD, AAPL, IBM, CSCO, etc….

·         The defense sector will likely receive budget cuts moving forward so companies that should experience weakness include NOC, LMT, RTN, AVAV, etc…

·         The utilities companies that are weighted towards coal and natty gas will be slapped silly.  The President dislikes coal and natty gas so these companies will be taken to the shed out back and beaten relentlessly.  Utilities that are weighted more towards solar and alternative energy, as well as solar and alternative energy stocks, should jump higher such as EXC, FSLR, STP, SPWR, etc….

·         Alternative energy stocks including algae will receive positive attention.

·         The oil industry will sell off and likely stumble thru a malaise moving forward.  Restrictions on oil drilling and pipelines will continue and handicap the oil industry.  Oil plays should receive weakness such as XOM, CVX, NBL, RIG, CVE, etc….

·         The energy sector in general should receive a slap in the face, XLE.

·         Natty gas and pipeline companies will sell off since the natty gas renaissance will be rejected. Companies that should drop include TRP, GTLS, CLNE, etc…

·         Coal companies will be beaten beyond recognition such as ACI, ANR, BTU, CNX, etc… 

·         In the financial sector, the ‘too big to fail’ banks provision in Dodd-Frank will likely remain in place so the large banks will receive preferential treatment.  The big boys such as JPM, WFC, C, BAC should benefit although this is a tricky call to make based on the single Dodd-Frank provision.  The regional banks will likely continue along in a malaise.

·         The tax code should likely stay complicated without any changes so tax preparer’s will be in large demand such as HRB.

·         An infrastructure program is favored but by the time it is developed and moves thru Congress the affects due to this concept will likely be minimal.

IF ROMNEY WINS:

·         Obamacare would be repealed and replaced so hospitals and medical device companies such as HCA, HMA, THC, CYH, LPNT, UNH, ISRG, CERN and MASI should sell off and insurer’s and HMO’s such as CI, AET and WLP should bounce.  ESRX should sell off.

·         Dividend stocks should remain elevated since the capital gains taxes would not be increased. This action would be favorable to the broad indexes.

·         The repatriation tax rules will likely be relaxed so stocks with large cash holdings overseas should benefit such as MCD, AAPL, IBM, CSCO, etc….

·         The defense sector will rock and roll since Romney does not want to cut military spending so companies that should benefit include NOC, LMT, RTN, AVAV, etc…

·         The utilities companies that are weighted towards coal and natty gas should benefit. Utilities that are weighted more towards solar and alternative energy, as well as solar and alternative energy stocks, should receive a beating such as EXC, FSLR, STP, SPWR, etc….

·         The oil industry will catapult higher as more areas are opened to drilling. Long XOM, CVX, NBL, RIG, CVE, etc….

·         The energy sector in general should receive a boost, XLE.

·         Natty gas and pipeline companies such as TRP, GTLS, CLNE, WMB, CLH, etc…, should benefit since the natty gas renaissance can finally begin in force.

·         Coal will regain its prominence as the top U.S. fuel so coal companies will rock higher such as ACI, ANR, BTU, CNX, etc…  The steam coals (used for electricity power generation) are favored more than the metallurgical coals (used for coke production and steel making).

·         In the financial sector, the ‘too big to fail’ banks may sell off since Romney does not like the provision in Dodd-Frank that provides these institutions favored status.  So the big boys such as JPM, WFC, C, BAC should experience lackluster performance.  However, Romney favors a stronger regional bank sector that was once the back bone of America. So the regional banking plays should appear attractive such as KRE, MIT, etc…

·         The tax code should be simplified under Romney so tax preparer’s may be in less demand such as HRB.