THE projected Democrat Blue Wave did not materialize as Republicans kept control of the Senate. This limits what President-elect Joe Biden can do. It restrains his ability to significantly increase taxes or impact health care and climate legislation.
Technology
In a split Congress with a Republican Senate and Democratic house, technology stocks will perform well in a Biden administration.
Health care
A divided government means less impact on health care. Without the blue wave, dramatic changes to health-care policy and drug prices are less likely. It’s doubtful that aggressive Democratic policies on drug pricing will pass a GOP Senate.
Infrastructure
President-elect Biden’s infrastructure plan is geared toward green jobs and clean energy projects to:
• Build a modern infrastructure.
• Modernize schools.
• Repair water pipelines and sewer systems.
• Improve the energy efficiency of homes and commercial structures.
• Invest in clean energy innovation.
• Achieve a carbon pollution-free power sector by 2035.
However, a split government will reduce the size of infrastructure programs. President Trump was also big on infrastructure projects but failed to deliver. Under a Biden administration, traditional projects for roads, bridges and overall construction can perform well. We expect the next four years to be upbeat for machinery, building materials, construction and engineering firms.
Industrials and materials
While President Trump bullied other countries, specifically China, for unfair trade practices, Biden will likely form a coalition with allies to contain China and lower trade tensions. Hopefully, he will not allow China’s Belt and Road initiative to take over the third world. President Trump awakened the world on China’s bullying tactics unchecked for decades. Hopefully, President-elect Biden will follow through. Railroads, defense and waste industries would benefit from the lower odds of a tax hike that Biden advocates. Defense companies would also benefit from lower risk of a defense spending cut.
Consumer discretionary and consumer staples
Low interest rates will continue to help housing and home improvement equities. High income taxpayers will benefit from a lower likelihood of huge tax increases. Think Home Depot, Caterpillar, Cummins, U.S. Concrete, American Tower, Blackstone, or Flour. Get up. Go trade stocks.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].