KO 대한민국
베어링 인베스트먼트 인스티튜트
거시경제 및 지정학

Only 365 Days to Go!

2019년11월1일 - 3 분 읽기

Elections may be good for America, but this one won’t boost stocks.

They are far too expensive and long, but this U.S. presidential election now has just one year to go. While it is too soon to pick a likely winner⁠—let alone assess what the vote means for the country's mood or world's prospects⁠—it’s hard to see how any outcome will be good for the narrower interests of the stock market.

A combination of lower interest rates, Chinese recovery and resilient U.S. consumer demand could yet drive stocks to new highs over the next 12 months. But it won't get any help from the Democratic presidential candidates or the incumbent Republican.

Campaign platforms should not be taken too literally before they confront the reality of Washington lobbying and budget stress. Recent market swoons have been linked to some of the more extreme ideas of Massachusetts Senator Elizabeth Warren as her poll numbers rise, but few of her plans stand a chance of making it into law without significant dilution. Still, it’s increasingly clear that almost any outcome from Vermont Senator Bernie Sanders to Donald Trump will lead to an erosion of corporate earnings through some combination of higher taxes or tariffs and tougher regulation or competition policy.

Depending on your views, these initiatives may advance fairness, freedom or growth. But they won’t do much for the S&P 500.

"[A]lmost any outcome from Vermont Senator Bernie Sanders to Donald Trump will lead to an erosion of corporate earnings through some combination of higher taxes or tariffs and tougher regulation or competition policy."

No matter who takes the oath on Inauguration Day in January 2021, even lavish spending plans will have to be offset by higher taxes given the parlous state of the budget. Monetary policy probably won’t change much even if Jerome Powell is replaced. But government pressures on corporate behavior and profits will inevitably grow. 

First, a little history on the market in election years. On average, there are few reliable patterns about how stocks or bonds perform during these quadrennial events (Figure 1). Similarly, Moody’s Analytics finds it's hard to link the handwringing over election-year uncertainty with either worse stock performance or slower growth.

figure 1: U.S. STOCK (AVERAGE ELECTION YEAR 1980–2016)

Source: Bloomberg as of November 1, 2019.

This time, in fact, there may be a lot less uncertainty than meets the eye. And that’s just the problem for stocks. 

President Trump and his Democratic challengers are all riding a wave of dissatisfaction and a growing sense that rich, mostly coastal elites have benefitted unfairly and the system the president himself still labels “rigged.” 

The broader economic story for the last several decades is that returns to capital have been rising while returns to labor have not. A recent rebound may represent typically higher wages at the end of an economic cycle, but the secular trend has been lower for the last five decades (Figure 2). Income inequality and wealth disparities have been growing, too.

The causes include automation that replaces jobs, globalization that keeps wages low and labor unions whose political clout has waned. Many economists also point a finger at tax policy that is often shaped more by lobbying and campaign contributions than concerns for fairness and productivity.


Source: Bloomberg as of November 1, 2019.

In many industries, the decline in competitive pressures has made things worse. While the world of tech startups remains innovative and hyper-competitive, our recent Barings Investment Institute White Paper highlights the durable advantages of firms that lodge themselves into the economy’s deeper infrastructure⁠—the Googles, Facebooks and Amazons. They and other enterprises such as airlines and telecommunications providers also benefit from competition rules that still struggle to keep up with change.

The result skews division of spoils still further. Studies show that U.S. households pay at least double European prices for internet service. Meanwhile, by one estimate, American families pay $300 more per month on goods and services than they would have with the competitive pressures that existed 20 years ago. 

Weak competition also means profits can be funneled into share buybacks and dividends since firms are under less pressure to invest in innovation. Fixed asset investment suffers and economic growth slows.

Political pressures build, too. The one thing Barack Obama and Donald Trump share is that they came to power as "change" candidates. Change is clearly what the Democrats mean as they decry rising levels of inequality. Their most extreme plans are unlikely to become law, but a winning Democrat will try to nudge policy toward more spending on social services and higher taxes. He or she will propose much more muscular regulation of anti-competitive behavior.

What is ironic, perhaps, is that the Republican candidate and incumbent president will be digging into corporate profits, too, if from different angles. In spite of his signature tax cuts of 2017, the president's tariffs have exacted a direct tax on importers and their customers. While he touts the regulations his administration has cut, he has introduced fresh business uncertainty with threats of further tariffs and sanctions against China and Europe which will hardly subside in a second term. 

If re-elected, there will likely be further efforts to cut drug prices, regulate technology giants and brow-beat any firm that’s even thinking about relocating a plant to Mexico. He may now be the “continuity” candidate, but he doesn’t bring much predictability to corporate America.

Thus, this modest prediction. Amid the inevitable silliness and pettiness of campaigning, the debate will grapple somehow with themes around fairness and growth. Most of the ideas on the table will involve greater government influence in corporate behavior and, all else equal, lower profits and stocks.

해당 자료에 제시된 전망은 작성 시 시장에 대한 베어링자산운용의 견해를 바탕으로 작성되었습니다. 작성된 이후, 다양한 요인에 따라 사전통지 없이 내용이 변경될 수 있습니다. 또한 본 자료에서 언급된 투자 결과, 포트폴리오 구성 및 사례는 단순 참고용이며, 결코 미래 투자 성과 혹은 미래 포트폴리오 구성을 보장하지 않습니다. 투자에는 위험이 수반됩니다. 투자와 투자에서 발생하는 향후 소득 가치는 하락 또는 상승할 수 있으며, 투자 수익은 보장되지 않습니다. 과거성과는 현재 또는 미래성과를 보장하지 않습니다. 

더 읽어보기

또한 본 자료에서 언급된 투자 결과, 포트폴리오 구성 및 사례는 단순 참고용이며, 결코 미래 투자 성과 혹은 미래 포트폴리오 구성을 보장하지 않습니다. 실제 투자의 구성, 규모 및 위험은 본 자료에서 제시된 사례와 현저히 다를 수 있으며, 투자의 향후 수익 혹은 손실 여부에 대해 보증 및 보장하지 않습니다. 환율 변동은 투자가치에 영향을 미칠 수 있습니다. 잠재 투자자들은 본 자료에 언급된 펀드의 자세한 내용과 구체적인 위험요인에 관하여 투자설명서를 반드시 읽어 보시기 바랍니다.
베어링은 전 세계 베어링 계열사의 자산운용 및 관련 사업의 상표명입니다. Barings LLC, Barings Securities LLC, Barings (U.K.) Limited, Barings Global Advisers Limited, Barings Australia Pty Ltd, Barings Japan Limited, Barings Real Estate Advisers Europe Finance LLP, BREAE AIFM LLP, Baring Asset Management Limited, Baring International Investment Limited, Baring Fund Managers Limited, Baring International Fund Managers (Ireland) Limited, Baring Asset Management (Asia) Limited, Baring SICE (Taiwan) Limited, Baring Asset Management Switzerland Sarl, Baring Asset Management Korea Limited 등은 Barings LLC의 금융서비스 계열사로(단독으로는 “계열사”) “베어링”으로 통칭합니다.
본 자료는 정보 제공의 목적으로 작성된 것이며, 특정 상품이나 서비스의 매매를 제안하거나 권유하기 위한 것이 아닙니다. 본 자료의 내용은 독자의 투자목적, 재무상태 또는 구체적인 니즈를 고려하지 않고 작성되었습니다. 따라서, 본 자료는 투자자문, 권유, 리서치 또는 특정 증권, 상품, 투자, 투자전략 등의 적합성 또는 적절성에 대한 권고가 아니며 그러한 행위로 인식되어서도 안됩니다. 본 자료는 투자 전망 또는 예측으로 해석되어서는 안됩니다.
달리 명시되지 않는 한, 본 자료에 제시된 견해는 베어링의 것입니다. 작성 당시 알려진 사실을 바탕으로 신의 성실하게 작성 되었으며 사전통지 없이 변경될 수 있습니다. 개별 포트폴리오 운용팀은 본 자료에 제시된 것과 다른 견해를 가질 수 있으며 고객별로 다른 투자 결정을 내릴 수 있습니다. 본 자료의 일부 내용은 베어링이 신뢰할 만 하다고 판단하는 출처에서 획득한 정보를 근거로 작성되었습니다. 본 자료에 수록된 정보의 정확성을 확보하기 위해 최선의 노력을 기울였으나, 베어링은 정보의 정확성, 완전성 및 적절성을 명시적 또는 묵시적으로 보증하거나 보장하지 않습니다.
본 자료에 언급된 서비스, 증권, 투자 또는 상품은 잠재투자자에게 적합하지 않을 수 있으며 해당 관할권에서 제공되지 않을 수 있습니다. 본 자료의 저작권은 베어링에 있습니다. 본 자료에 제시된 정보는 개인용도로 사용될 수 있으나 베어링의 동의 없이 변형, 복제 또는 배포할 수 없습니다.



베어링자산운용은 당사 웹사이트 사용자들에게 최적화된 웹 경험을 제공하고자 쿠키를 사용합니다.
베어링 웹사이트를 이용함으로써, 당사의 쿠키정책법적 & 개인정보고지사항에 동의하는 것으로 간주합니다.