Election 2024: Where To Put Your Money Ahead of the Vote

In this recurring series, The Fly recaps where the top analysts on Wall Street say to put your money ahead of November’s U.S. presidential election. In this edition, the Teamsters union declines to endorse a candidate for the first time in 28 years, while UBS offers its picks in the Automaker & Supplier space.

BUILDING MATERIALS: Deutsche Bank on Monday said it believes a Harris win could bring opportunities in the building materials space, with the Inflation Reduction Act  remaining intact and increased support for housing, benefiting residential construction. Implications could also include a higher corporate tax rate, incremental taxation of share repurchases, and reduced stimulus for “reshoring” activity, the firm said.

Publicly traded companies in the space include Carlisle (CSL), 3M (MMM), HB Fuller (FUL), Eagle Materials (EXP), Summit Materials (SUM), Martin Marietta (MLM), Vulcan Materials (VMC), and Cemex (CX).

AUTOMAKERS & SUPPLIERS: In a Democratic win, UBS said Wednesday that it expects a “mostly status quo” scenario for EV-related and tariff policy. The firm would expect some outperformance from EV-related stocks on the removal of uncertainty over further EV pushouts, but said taxes could be a headwind for the entire group. In a Republican win, UBS believes Trump could attempt to roll back EV policy, potentially undoing EV tax credits under the IRA, and look to loosen EPA standards. He could also look to lower U.S. taxes, UBS said. taxes. In a Trump win, UBS expects a positive initial reaction to ICE exposed names such as Ford (F), General Motors (GM), Phinia (PHIN), American Axle (AXL) and others. If Trump were to implement a tariff on all imports including Mexico, this would be highly disruptive for the entire U.S. automotive value chain, UBS said. The firm also noted that one under-the-radar aspect of Trump policy is that while he is anti-China vehicle imports, he is pro Chinese automakers building capacity in the U.S., which would  be “highly disruptive” to the current U.S. auto supply complex.

UBS believes that consumer credits help support EV demand and notes that currently, up to $7,500 per new EV is available to consumers under the IRA. If Clean Vehicle Credits are removed, this would be negative for EV demand in the U.S. A revision or removal of the advanced manufacturing production tax credit, which is designed to incentivize domestic production and sale of components for renewable energy products, and provides a $35/kWh tax credit for battery cells and another $10/kWh for battery modules, would be a headwind to EV adoption/demand as the cost of domestically sourced batteries would likely rise substantially. This could impact Tesla (TSLA), Rivian (RIVN), as well as Aptiv (APTV), Visteon (VC), TE Connectivity (TEL), Amphenol (APH), and QuantumScape (QS), as well as GM, but could mean higher ICE sales, which are an offset for Ford, GM, as well as a potential benefit for suppliers with an ICE angle, including Phinia, American Axel, and Dana (DAN).

While the National Electric Vehicle Infrastructure Program isn’t under the IRA, it is under the Infrastructure Investment and Jobs Act, and the goal is to create a coast-to-coast network of EV chargers. If Trump wins the White House, UBS thinks NEVI could be a prime candidate for the budget reconciliation process given the Republican stance on EV policy. Companies like Tesla and Rivian are already building out their own charging networks in order to help fuel EV adoption, and this removal could slow build outs, UBS said, while connector companies like TE Connectivity and Amphenol could be negatively impacted given their exposure to EV charging.

As far as EPA regulations, in a Republican win scenario, UBS would expect a loosening of standards, particularly on emissions, which would be a net positive for legacy automakers like Ford and GM. In a Democratic win scenario, UBS would expect the status quo in regard to EPA powers and standards, which would continue to benefit the EV automakers like Rivian and Tesla and negatively weigh on legacy automakers.

U.S. STEEL DEAL: The White House is delaying any announcement of a decision about whether it will block Nippon Steel’s (NPSCY) proposed $15B acquisition of U.S. Steel (X), The Washington Post reported last Friday. Harris previously voiced her opposition to Nippon Steel’s pending purchase of U.S. Steel saying at an event in Pittsburgh that U.S. Steel should remain domestically owned and operated. The deal has become an issue in the U.S. presidential race because U.S. Steel is headquartered in Pittsburgh, Pennsylvania, a critical swing state. On Tuesday, Bloomberg reported that Nippon Steel is slated to get an extension in the security review over the proposed takeover of U.S. Steel, likely pushing a decision on the politically contentious deal past the U.S. election. On Thursday, U.S. Steel said it continues to work towards closing the transaction by the end of the year.

CHEVRON BLAMES BIDEN: Chevron (CVX) CEO Mike Wirth said the Biden administration’s oil and gas policy pushes up prices and “undermines energy security” for U.S. allies, The Financial Times’ Myles McCormick and Jamie Smyth reported. Wirth told the Gastech conference in Houston on Tuesday that President Joe Biden’s “attacks on natural gas” and freeze on new export permits for liquefied natural gas terminals had put “politics over progress” and would hurt climate efforts. “It raises energy costs by taking potential supply off the market… It threatens reliable supplies of LNG, undermining energy security for our allies. And it slows the transition from coal to natural gas, meaning more emissions not less.” “When it comes to advancing economic prosperity, energy security and environmental protection, an LNG permitting pause fails on all three,” he added.

Wirth’s comments come as Republicans and Democrats clash over energy policy ahead of the election, with Donald Trump pledging to roll back the Biden administration’s climate agenda that he blames for pushing up fuel costs. Trump on Tuesday vowed to cut energy prices by 50% by unleashing greater production. Meanwhile, Harris previously said she would ban fracking.

TRUMP NOT PLANNING TO SELL STAKE: Donald Trump said he has “absolutely no intention of selling” his stake in Trump Media (DJT) when he is free to do so. The Republican presidential nominee, who would be allowed to start cashing in his nearly 57% stake this week when a lockup agreement expires, said while speaking with the media that he does not intend to do so and does not need the money.

TEAMSTERS UNION DECLINES TO ENDORSE: The International Brotherhood of Teamsters this week decided not to endorse a candidate in the November presidential election after a poll had found that 58% of its members wanted it to endorse Trump, almost twice the number favoring Harris. It is unclear how many of the union’s 1.3M members, which include UPS (UPS) drivers, railroad workers, and nurses, were polled. Union president Sean O’Brien said in a statement: “We sought commitments from both Trump and Harris not to interfere in critical union campaigns or core Teamsters industries – and to honor our members’ right to strike – but were unable to secure those pledges.” It is the first time that the union has not made an endorsement in 28 years. Teamsters endorsed Joe Biden and Harris in 2020. Other major unions, including the United Auto Workers, United Steelworkers and American Federation of Teachers, endorsed Harris soon after she launched her campaign.