Election promises meet reality

The current US election presents a tight race, with polling too close to call, creating uncertainty in economic analysis. Despite the political rhetoric, the actual economic impact of a single president may be less significant than campaign promises suggest. Both candidates propose large fiscal spending, with potential implications for the federal deficit, which is expected to remain wide regardless of the election outcome.

Tariffs remain a key risk, with Trump proposing more significant tariffs that could impact trade liberalization gains, although they might serve as negotiation tactics. Inflationary pressures could be higher under Trump due to tariffs, increased spending, and potential labor market restrictions from immigration policies. However, actual implementation of these measures may face significant challenges.

Corporate profits could benefit from a Trump administration, but stability under Harris might also be favorable. Mergers and acquisitions could see a more favorable environment under Trump, while energy policies would differ, with Harris supporting clean energy and Trump maintaining a traditional approach. The global trend towards renewables is likely to continue regardless of the administration.

A divided Congress is anticipated, limiting major legislative changes, with regulatory influence being a more significant avenue for policy impact. Portfolio managers are advised to focus on economic fundamentals rather than election outcomes, with potential adjustments only if a significant Red Wave occurs, which could alter fiscal stimulus expectations and market dynamics.