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Market impacts of elections.
Before I give the gist, please keep in mind that we are opportunity seekers, not political analysts. We don't take sides, only objectively look at the trades that might come to fruition based on what happens.
I was sifting through some of the sell side research this evening and wanted to share some interesting tidbits which is notable. Goldman noted a divided house and senate will cause lower defense spending overall. While an all blue sweep will impact defense spending positively.
Over the last few weeks, it seems like a blue sweep is becoming more and more likely based on election implied odds.
House odds are starting to shift as well.
We mentioned the idea of getting involved in defense names like GD. This seems to now hinge on the republican sweep being more likely. As the democrats start to have a stronger showing, we have to think about infrastructure stocks at the forefront. The simple truth is, money flows based on these outcomes.
Interesting to see XHB down at these levels holding it's recent 61.8% retracement
Names like LEN could easily trade back to the 100 handle based on flows
PHM could trade up to the 50 handle vs these swing lows
I'm looking at getting into a basket of homebuilders on declines and if the blue trend continues to drift higher.