UBS says Citi to be beneficiary of Trump victory, B. Riley says Aspen Aerogels weakness represents buying opportunity ahead of earnings In this recurring series, The Fly recaps where the top analysts on Wall Street say to put your money ahead of November's U.S. presidential election. In this special Election Day edition, analysts give their final thoughts as the polls officially open for voting.
CHIPS ACT: U.S. House Speaker Mike Johnson said Friday that the Republicans "probably will" try to repeal the CHIPS Act, but then walked it back, saying the GOP may "further streamline" the bill, Stephen Groves of The Associated Press reports. A reporter had asked Johnson whether he would try to repeal the bipartisan CHIPS and Science Act, which Republican presidential nominee Donald Trump had disparaged last week. "I expect that we probably will, but we haven't developed that part of the agenda yet," Johnson replied. Democrats quickly jumped on the Republican speaker's comments, warning that it showed how Johnson and Trump are pursuing an aggressive conservative agenda bent on dismantling even popular government programs. The White House has credited the CHIPS Act for spurring hundreds of billions of dollars of investments as well as hundreds of thousands of jobs. Vice President Kamala Harris has pointed to the legislation on the campaign trail as proof that Democrats can be entrusted with the U.S. economy. Johnson, who voted against the legislation, later said in a statement that the CHIPS Act, which poured $54B into the semiconductor manufacturing industry, "is not on the agenda for repeal."
Publicly traded companies in the space include Advanced Micro Devices (AMD), Intel (INTC), Qualcomm (QCOM), NVIDIA (NVDA), Marvel (MRVL), Texas Instruments (TXN), Micron (MU), Microchip (MCHP).
BANK SECTOR: DA Davidson considered potential post-election scenarios and the impact on the bank sector. The firm views near-term bank stock trading as more likely to benefit under a Trump victory, with a potential dip if Harris prevails, while the firm's longer-term bias, based on bank fundamentals, remains constructive, regardless who wins. The firm said that "it is clear" the candidates would have differing approaches in multiple areas, most notably corporate tax rates, but also regulatory oversight, and consumer protection, and, assuming lower rates and a stable economy, the firm would expect loan growth to improve regardless of a Trump or Harris presidency,as many banks have suggested election uncertainty, along with still elevated interest rates, is the current sticking point for customers.
DA Davidson noted that bank stocks rallied over 26% following the 2016 Trump election victory through the end of that year, reflecting expectations of a corporate tax cut, which came to fruition at the end of 2017. Trump is focusing on an additional corporate tax cut to the 15% level, with Harris endorsing a shift upward to 28%. Additionally, while there wouldn't be a regulatory regime change overnight, DA Davidson said that the general perception is that a Trump victory would be more business-friendly, with easing regulatory control over the bank sector, paving the way for increased M&A activity among larger banks, which has been restrained in recent years. Consumer protections could also shift in either presidency, aiding or further inhibiting the ability of financial institutions to charge fees to retail customers, the firm says. Ultimately, DA Davidson said that election upside appears at least partially priced in. A Trump victory likely generates a near-term positive move, albeit muted vs. the 2016 rally, while a Harris victory, is a near-term negative, but does not negate positive underlying fundamentals longer term, the firm said.
Publicly traded companies in the space include Bank of America (BAC), Citi (C), Goldman Sachs (GS), JPMorgan (JPM), Morgan Stanley (MS), U.S. Bancorp (USB) and Wells Fargo (WFC).
HEALTHCARE: Mizuho believes former President Trump is likely to win the presidential election, with at least five of the seven toss-up states likely voting for the former President. The firm said the Senate appears likely to flip Republican, and thinks the House is a toss up, with the potential for a Democrat win given more Republicans are defending seats in Democratic districts. Mizuho believes this outcome is most positive for companies with exposure to Medicare Advantage, especially Humana (HUM). Other publicly traded companies in the space include CVS Health (CVS), Centene (CNC), Cigna (CI), Elevance Health (ELV), Molina Healthcare (MOH) and UnitedHealth (UNH).
SECTORS 'SENSITIVE' TO ELECTION: JPMorgan, in a note to investors, said that CHIPS Act beneficiaries and China Revenue exposure themes are more sensitive to Democrats, while Federal spending and Energy companies sensitive to Geopolitics themes are more sensitive to Republican odds of winning. The firm said markets have not fully priced tariff risk given the performance of companies with high China revenue exposure and U.S. importers. As far as specific sectors, the firm said that in a Republican scenario, with the emphasis on U.S. energy independence and security, maintaining an abundance of oil can be seen as a way to reduce inflation, provide relief to US households and support the economics of onshoring. The firm added that energy could be vulnerable to downward pressure to prices. JPMorgan also said that the retail sector is likely vulnerable to tariff increases given significant import exposure and lower relative pricing power. Some of this should be offset through minor pricing pass-through, shifting production, cost cutting and strengthening USD, while autos likely benefit from stronger tariff protections from overseas competition though this will likely be partially offset by higher input costs from other tariffs. There could be some movement on the uncapped EV credits, which may affect EV adoption but state mandates are expected to remain "sticky," JPMorgan said. Publicly traded electric vehicle makers include Tesla (TSLA), Rivian (RIVN), General Motors (GM), Lucid Group (LCID), Nio (NIO), Li Auto (LI), and Xpeng (XPEV).
Further, the firm said the industrial sector should be vulnerable given their multinational footprint to increased tariffs and would likely be negatively impacted by tariffs on key inputs. JPMorgan said U.S. regional banks and U.S. small caps could benefit from deregulation and tax cuts for small and/or domestic oriented businesses with the potential to be amplified by short covering. In technology and communication, the firm said there could be a "meaningful" benefit in M&A with a more supportive FTC, though this will likely benefit companies outside the "Mag7." If trade hits physical goods more than digital as it did during the first round of tariffs under Trump 1.0, the firm would expect software to outperform tech hardware/semis around tariff increases.
The repeal of the ACA remains a risk, though a low probability one, JPMorgan argued. The larger concern is around ACA subsidies being extended in FY25, and said drug pricing remains a focus, though is not expected to accelerate as it would under a Blue Wave Tail scenario. The firm also noted that Medicare Advantage policies are on the line, with Republicans likely pushing for more favorable rates and less scrutiny, while Democrats will look to maintain current regulatory pressures, affecting margins and reimbursement rates. Regarding the Inflation Reduction Act and Drug Pricing, Democrats are expected to continue supporting the bill and push for lower drug prices. The firm also said it would expect an impact from deregulation with a "friendlier" EPA, and said alternative energy like wind and solar could be negatively impacted by leasing, permitting and tariffs.
AI: Into the election, in the case of a Harris win and GOP Senate, UBS said it expects AI will outperform as it remains the primary home for fresh capital from the sidelines. However, in a Red sweep situation, UBS expects AI to underperform, but still trade higher, as investor capital would likely be drawn away from AI winners into financials in the short-term, the firm said. Some publicly traded companies in the space include Nvidia, Microsoft (MSFT), Google (GOOGL), Meta (META), Broadcom (AVGO), and Marvell Technologies.
WOLFE: Wolfe Research again put out its election night guide for investors. Under a Trump victory, the firm says tariff escalations would pressure input costs, hurt global exports, and be a drag on China-exposed stocks, while under a Harris election, the firm sees "status quo" on most tariffs, with targeted export restrictions on strategic Chinese sectors. Wolfe would also expect Harris to implement IRA rules, including the transition to tighter Chinese content rules and to implement and defend emissions rules on autos and power plants. The firm sees modestly higher U.S. base defense spending growth under a Trump victory and base spending caps offset by more Ukraine aid under a Harris election. In healthcare, under Trump, ACA tax credits would be expected to expire with risks to Medicaid costs, though the firm expects "more generous" Medicare Advantage rate proposals and "less aggressive" IRA drug price negotiation offers. Under a Harris win, the firm expects no Medicaid cuts, status quo on MA rates and other CMS policy and IRA drug price negotiation offers. In financials, the firm expects Trump would withdraw proposals on bank capital, nonbank SIFIs, credit card late fees, and other new SEC rules, as well as a ease the regulatory crackdown on crypto, while Harris would finalize, defend and start enforcing rules on bank capital and complete any non-bank SIFI designations with "some" moderation of anti-crypto postures.
Publicly traded companies in the fossil fuels space include BP (BP), ExxonMobil (XOM), Chevron (CVX), Halliburton (HAL), Devon Energy (DVN), Shell (SHEL), EQT (EQT), ConocoPhillips (COP), Duke Energy (DUK), and Occidental (OXY).
CITI: UBS told investors on Tuesday that Citi would be a beneficiary of a Trump victory, particularly given its lagged performance, despite being a "regulatory turnaround story." The analyst considers whether Citi works beyond a Trump trade and even with a Harris win, and with 2026, a key year in measuring Citi's progress, looming, what will get long-only investors off the sidelines. The firm made no change to its Neutral rating or $71 price target.
ASPEN AEROGELS: Aspen Aerogels' (ASPN) recent weakness represents a buying opportunity ahead of earnings, B. Riley told investors in a research note on Tuesday. The firm said that a Harris administration would likely continue funding EV manufacturing, subsidizing EV purchases for consumers, and encouraging OEMs to produce more EVs via emission regulations, while a Trump victory would likely put EV incentives and subsidies at risk.
TRUMP MEDIA: Shares of Trump Media & Technology (DJT) rose on Election Day, with traders betting a second Trump presidency would give the business prospects of the Truth Social operator a boost. The massive run up in shares of Trump Media has "been described by me and others as a meme-induced phenomenon," wrote Charles Gasparino on Friday, who added that "On The Money has learned that there might be a better reason why some traders are buying - and maybe holding - the stock even if Trump loses on Tuesday." The report claimed that "people inside the Trump camp have been speculating for weeks now that Truth Social will at some point, maybe sooner rather than later, get subsumed by the mega-MAGA supporting Elon Musk, and his own social media platform X, formerly known as Twitter," but goes on to add: "Full disclosure: I have not confirmed that speculation with anyone in a position to make the deal happen - neither Musk nor Trump himself."
The stock has more than quadrupled since late September and is now valued at over $10B, and over the past six weeks, the stock is up more than 300%. Market research firm S3 Partners last week said the rise in Trump Media's stock closely mirrored Trump's odds in prediction and betting markets, which have increasingly shifted toward expecting victory for Trump, which would benefit Truth Social. Despite the swings in DJT stock, the latest NBC News poll shows Trump and Harris are neck and neck, with both candidates getting support from 49% of voters.
