Top 10 Market-Moving Policies If Kamala Harris Wins the 2024 Election: A Breakdown for Investors
In a detailed note to clients published Friday, Jefferies' strategists outlined the ten most actionable policies that could come into effect if Kamala Harris wins the 2024 presidential election. These policies, based on the 2024 Democratic Platform and Harris' recent statements, require minimal legislative action and focus on key areas such as Tax, Regulations, Industrial Policy, Trade, and Energy Transition.
1. Restore Top Individual Income Tax Rate to 39.6%
The proposed restoration of the top individual income tax rate to 39.6% for single filers earning above $400,000 and joint filers earning above $450,000 would roll back the 2017 Tax Cuts and Jobs Act. This move is expected to impact high-income earners, potentially benefiting mortgage companies like Guild Holdings (GHLD) and LoanDepot (LDI), while luxury retailers such as Arhaus (ARHS) and Williams-Sonoma (WSM) could face headwinds due to decreased discretionary spending among affluent consumers.
2. New Rules to Curb Profit Margins in Food and Grocery Sectors
To combat inflation and prevent price gouging, new rules and penalties are proposed to limit profit margins in the food sector. This could pose challenges for companies like Costco (COST), Target (TGT), and Walmart (WMT), as stricter regulations may be enforced.
3. Intensified Antitrust Enforcement
The Harris administration is expected to bolster antitrust enforcement across various sectors, particularly technology and healthcare. Companies such as Amazon (AMZN), Adobe (ADBE), Alphabet (GOOGL), Meta (META), and Pfizer (PFE) could be under increased scrutiny, potentially affecting their merger and acquisition activities.
4. Lower Drug Costs Through Pricing Transparency
Aiming to reduce drug costs, this policy would require Pharmacy Benefit Managers (PBMs) to provide pricing transparency. Generic drug manufacturers like Teva (TEVA) could benefit, while large PBMs such as CVS Health (CVS) might face negative impacts.
5. AI Guidelines via the AI Safety Institute
The establishment of AI guidelines is intended to regulate AI usage across various sectors. Cybersecurity firms such as Palo Alto Networks (PANW) and CrowdStrike (CRWD) could see increased demand for AI-related security solutions.
6. Use of American-Made Materials for Federal Infrastructure Projects
A policy promoting the use of American-made steel, lumber, drywall, concrete, and other materials for federally-funded infrastructure projects could boost domestic manufacturing. Companies like Nucor (NUE) and Steel Dynamics (STLD) are expected to benefit.
7. Reshoring Supply Chains for Critical Materials and Technologies
Efforts to reduce reliance on China for critical materials and technologies could favor companies involved in domestic production, such as Intel (INTC) and Texas Instruments (TXN).
8. Limiting Technology Exports to China
Restrictions on exporting advanced technologies to China, deemed harmful to national security, could negatively impact companies like Nvidia (NVDA) but benefit cybersecurity firms like CyberArk (CYBR).
9. Electrification of Federal Fleet
The push toward electrifying federal vehicles, including school buses and transit buses, is likely to drive demand for companies like Albemarle (ALB) and Alcoa (AA), which supply lithium for batteries.
10. Use of Low-Carbon Materials in New Federal Buildings
A requirement for low-carbon materials and clean power in all new federal buildings by 2030 is expected to boost demand for products from companies such as Alcoa, UL Solutions (ULS), and Linde (LIN).
Analysis: Breaking It Down for Everyone
If Kamala Harris wins the 2024 election, the outlined policies could significantly impact various sectors. High-income earners might see higher taxes, while stricter regulations on food prices could affect grocery retailers. Increased antitrust enforcement could reshape the tech and healthcare industries. Drug pricing transparency could lower costs for consumers but challenge PBMs. AI guidelines would boost the cybersecurity sector, and a focus on American-made materials could benefit domestic manufacturers. Reshoring supply chains and limiting tech exports to China would strengthen national security but affect tech companies. Electrifying the federal fleet and mandating low-carbon materials in federal buildings would drive demand in the clean energy and materials sectors.
Understanding these potential changes helps investors make informed decisions, ensuring they can strategically position their portfolios to benefit from or mitigate the impacts of these policies.