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ETFs in Focus as Economic Misery Gauge Tilts Toward Kamala Harris
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Democratic Kamala Harris could be victorious, per the so-called “misery index” that has successfully predicted presidential elections for four decades, if trends hold good, as quoted on CNBC. This gauge adds the unemployment rate and pace of annualized inflation together for insight into the intensity of voters’ displeasure about the economy.
This index has accurately predicted 15 of the last 16 elections, including all matchups since 1980, according to research firm Strategas, the CNBC article quoted.
Current Misery Index Reading
The current misery index stands at 7.02, which is below the critical level where the incumbent party typically loses an election. The unemployment rate fell to 4.2% in August, contributing to this decline, as shown in the latest jobs report.
Critical Threshold for Democrats
Strategas has identified that the misery index needs to remain below 7.353 in October for the incumbent party—in this case, the Kamala Harris-led Democrats—to secure victory. Historically, readings below this mark indicate that voters aren't feeling economically dissatisfied enough to oust the ruling party.
Factors Supporting Democrats
Falling gasoline prices and a modest decline in the unemployment rate have helped keep economic concerns in check, potentially favoring the Democrats. However, Daniel Clifton, Strategas’ head of policy research, noted that the race is "extremely close," CNBC noted.
ETF Areas to Gain
Against this backdrop, investors should track the investing ETF areas that could gain if Harris wins.
Climate
One of the key achievements of the Biden presidency was signing the Inflation Reduction Act, or IRA — the biggest climate spending law in U.S. history, with the potential to help reduce greenhouse gas emissions up to 42% below the 2005 levels by 2030.
As vice president, Harris argued for the allocation of $20 billion for the Environmental Protection Agency’s (EPA) Greenhouse Gas Reduction Fund. In short, she is in favor of promoting clean energy, including the installation of energy-efficient lighting, and replacing gas furnaces with electric heat pumps. So, clean energy ETFs like iShares Global Clean Energy ETF (ICLN) should gain.
Marijuana
Vice President Kamala Harris urged the DEA in March this year to expedite the rescheduling of marijuana, criticizing its current Schedule 1 classification as "absurd" and "patently unfair." She stressed the need for swift action and highlighted the ongoing efforts toward rescheduling. As a result, marijuana ETFs like Roundhill Cannabis ETF (WEED - Free Report) and AdvisorShares Pure US Cannabis ETF (MSOS - Free Report) should gain if Harris emerges as a winner.
AI Technology
Harris, known for her involvement in artificial intelligence (AI) policy, could bring increased focus on technology issues if elected, building on initiatives like the government's AI executive order. Her Silicon Valley connections and endorsements suggest strong support from tech circles. Roundhill Magnificent Seven ETF (MAGS - Free Report) and Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) are the likely winners if the AI rally continues (read: AI Stocks & ETFs to Rally on Likely Harris Trade?).
Housing
Harris prioritized affordable housing, advocating for the Rent Relief Act, offering tax credits to renters earning under $100,000, aiming to ease housing cost burdens. iShares US Home Construction ETF (ITB - Free Report) should benefit in this case, as the demand for rents should go up.
Tax Policy
She criticized Trump’s tax cuts as benefiting the wealthy and claimed that the booming stock market was not helping the middle class. If the middle class gets better off, ETFs like Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) should benefit.
U.S. Vice President and Democratic presidential candidate Kamala Harris has proposed hiking the corporate tax rate from 21% to 28% if she wins the November election. According to Goldman Sachs analysts, this hike could lower earnings for companies on the benchmark S&P 500 Index by about 5% (read: Will S&P 500 ETFs be Affected by Harris' Proposed Tax Hike?).
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ETFs in Focus as Economic Misery Gauge Tilts Toward Kamala Harris
Democratic Kamala Harris could be victorious, per the so-called “misery index” that has successfully predicted presidential elections for four decades, if trends hold good, as quoted on CNBC. This gauge adds the unemployment rate and pace of annualized inflation together for insight into the intensity of voters’ displeasure about the economy.
This index has accurately predicted 15 of the last 16 elections, including all matchups since 1980, according to research firm Strategas, the CNBC article quoted.
Current Misery Index Reading
The current misery index stands at 7.02, which is below the critical level where the incumbent party typically loses an election. The unemployment rate fell to 4.2% in August, contributing to this decline, as shown in the latest jobs report.
Critical Threshold for Democrats
Strategas has identified that the misery index needs to remain below 7.353 in October for the incumbent party—in this case, the Kamala Harris-led Democrats—to secure victory. Historically, readings below this mark indicate that voters aren't feeling economically dissatisfied enough to oust the ruling party.
Factors Supporting Democrats
Falling gasoline prices and a modest decline in the unemployment rate have helped keep economic concerns in check, potentially favoring the Democrats. However, Daniel Clifton, Strategas’ head of policy research, noted that the race is "extremely close," CNBC noted.
ETF Areas to Gain
Against this backdrop, investors should track the investing ETF areas that could gain if Harris wins.
Climate
One of the key achievements of the Biden presidency was signing the Inflation Reduction Act, or IRA — the biggest climate spending law in U.S. history, with the potential to help reduce greenhouse gas emissions up to 42% below the 2005 levels by 2030.
As vice president, Harris argued for the allocation of $20 billion for the Environmental Protection Agency’s (EPA) Greenhouse Gas Reduction Fund. In short, she is in favor of promoting clean energy, including the installation of energy-efficient lighting, and replacing gas furnaces with electric heat pumps. So, clean energy ETFs like iShares Global Clean Energy ETF (ICLN) should gain.
Marijuana
Vice President Kamala Harris urged the DEA in March this year to expedite the rescheduling of marijuana, criticizing its current Schedule 1 classification as "absurd" and "patently unfair." She stressed the need for swift action and highlighted the ongoing efforts toward rescheduling. As a result, marijuana ETFs like Roundhill Cannabis ETF (WEED - Free Report) and AdvisorShares Pure US Cannabis ETF (MSOS - Free Report) should gain if Harris emerges as a winner.
AI Technology
Harris, known for her involvement in artificial intelligence (AI) policy, could bring increased focus on technology issues if elected, building on initiatives like the government's AI executive order. Her Silicon Valley connections and endorsements suggest strong support from tech circles. Roundhill Magnificent Seven ETF (MAGS - Free Report) and Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) are the likely winners if the AI rally continues (read: AI Stocks & ETFs to Rally on Likely Harris Trade?).
Housing
Harris prioritized affordable housing, advocating for the Rent Relief Act, offering tax credits to renters earning under $100,000, aiming to ease housing cost burdens. iShares US Home Construction ETF (ITB - Free Report) should benefit in this case, as the demand for rents should go up.
Tax Policy
She criticized Trump’s tax cuts as benefiting the wealthy and claimed that the booming stock market was not helping the middle class. If the middle class gets better off, ETFs like Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) should benefit.
U.S. Vice President and Democratic presidential candidate Kamala Harris has proposed hiking the corporate tax rate from 21% to 28% if she wins the November election. According to Goldman Sachs analysts, this hike could lower earnings for companies on the benchmark S&P 500 Index by about 5% (read: Will S&P 500 ETFs be Affected by Harris' Proposed Tax Hike?).