What are the investment implications of the Biden agenda? President Biden will introduce a stimulus plan aimed at defeating the covid-19 epidemic and driving the US economy to an impressive recovery. How will it affect your investments? Because the Democrats will control the White House and both houses of Congress, we expect initial Biden proposals to pass. We have written about investing during the Biden administration and the potential for a Biden bull market. Now that the next President has laid out his plan with the details, there is speculation that foreign direct investment in Asia may rotate back to the USA and that infrastructure, ESL investing, health care, and especially clean energy investments will be the greatest beneficiaries.
Investment Winners from the Biden Stimulus Plan
Business Insider looks at Democratic control of Congress and the Presidency and Biden’s programs to turn back the covid-19 crisis, heal the economy, and set a new direction going forward. The first order will be to send the remainder of $2,000 to individuals and extend protections against evictions, etc. Like the stimulus last spring, this will help families across the country and put much-needed cash into circulation to the benefit of businesses small and large. But, Biden intends to go farther by promoting long-needed infrastructure spending with American companies and workers having first shots at contracts and jobs. There will be a push for a $15 an hour minimum wage and attempts to redo the tax code so that 90 of the largest American companies don’t get by without paying any Federal income taxes. Small businesses will be the first focus for much of the proposals. Green energy, health care with strengthening of the Affordable Care Act, and tech startups with increased regulation of today’s big tech will all be beneficiaries. America is likely to become a magnet for foreign capital again as the world’s largest economy begins to remake itself.
ESG Investment Boom Will Continue under Biden
Yahoo Finance writes about how ESG investing has boomed during the covid-19 crisis. These folks expect to see that trend continue, especially in regard to green investments and impact investing. Biden will rejoin the Paris climate agreement as soon as he assumes office and companies in this niche like Digital Turbine, Enphase Energy, and Tesla are likely to continue to benefit from this situation. Companies like Blackrock continue to invest in the ESL niche, driving stock prices higher and higher.
Investment Capital Will Rotate Out of Asia and into the USA
Following foreign direct investment is always a good way to spot investment opportunities. As the USA struggled with the covid-19 crisis and Asian nations had greater discipline and success, investment capital has flowed into emerging markets in Asia according to CNBC. They note that JPMorgan expects this trend to reverse as Biden’s proposals become law and the long-needed emphasis on US infrastructure takes hold.
According to James Sullivan, head of Asia ex-Japan equity research at JPMorgan :
“Most investors were very positive on Asia and emerging markets relative to the U.S.” before details of the latest rescue package were announced, Sullivan told CNBC’s “Street Signs Asia” on Friday.
“We’ve seen over 18 consecutive weeks of fund inflows into Asia ex-Japan over the course of the last couple of months,” he said, adding that it is “highly likely” that funds start to rotate out of emerging markets in Asia back to the U.S. as a result of the boost to economic growth from Biden’s plan.
Not only will Biden’s plan help us through the covid-19 crisis and shorten it but his proposed measures will provide much needed stimulus to accelerate the US economy and put it on a healthier track in the long term.
With Biden’s $1.9 trillion plan now coming in at more than twice the amount expected by JPMorgan, the analyst said it will be a “positive surprise” for the market as well as for overall levels of economic growth in the U.S.
The folks at JPMorgan expect to see China be the first affected by these changes.
Investment Implications of Biden Agenda – Slideshare Version