Month: November 2024

The stock market has surged to record highs since Kamala Harris entered the presidential race in July. Will the good vibes continue if she wins the White House? The answer might differ sector-by-sector.

Fortune surveyed analysts and academics about what stocks could rally on a Harris victory, as well as what companies might see their shares drop. Here are some companies to keep in mind:

Harris and former President Donald Trump differ starkly when it comes to climate and energy policy. As vice president, Harris cast the tie-breaking vote to pass the Inflation Reduction Act. Joe Biden’s signature climate law passed without any Republican support, and Trump has pledged to dismantle the system of tax credits and subsides that he’s dubbed a “green new scam.”

Whether Trump would be able to follow through on those campaign promises is unclear, but a Harris victory is likely much better news for renewables. Shares of First Solar, America’s largest builder of solar panels, have dropped 16% this month amid a backdrop of industry volatility and election uncertainty. A Harris victory could reward investors who have bought the dip.

A Harris administration could also help electric vehicle manufacturers looking to gain ground on Elon Musk’s Tesla, particularly as the EV giant’s CEO has put his full support behind Donald Trump. Musk’s political activism, including his public spats with California officials, has already presented an opportunity to companies like Rivian to pick off disgruntled progressive customers. As Musk seemingly bets Tesla’s future on autonomous driving, government subsidies and tax credits are critical to the chances of companies like Rivian to compete.

Offshore wind figures to benefit from a Harris win as well. Spanish energy giant Iberdrola has invested over $13 billion into the U.S. and UK over the past 12 months, fueling a 150% surge in profits for the first nine months of the year. Its American subsidiary, Avangrid, is available for a modest price-to-earnings ratio just north of 12, according to S&P Global.

Then there are less obvious choices. Shares of defense contractors like Honeywell, for example, have somewhat moved in tandem with chances of a Harris victory, according to a preliminary analysis by Georgetown University’s Michael Bailey. That could reflect how Harris is presumably a surer bet to continue America’s support for Ukraine against Russia’s invasion.

Finally, a Harris victory could allow major importers to breathe a sigh of relief. Trump’s proposals of at least a 10% worldwide tariff and a 60% tax on all Chinese goods would not be good news for big retailers like Target, so a Harris victory could erase concerns currently priced in to its shares.

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With such a close-run presidential race, policymakers at the 20 or so central banks setting borrowing costs in the coming week may need to prepare for an extended wait until there’s a settled result. In modern US elections, the losing candidate generally concedes within a day or two, but the 2020 outcome wasn’t called until four days later.

Click here for what happened in the past week, and below is our wrap of what’s coming up in the global economy.

US and Canada

Apart from the Fed decision, data due in the US include the preliminary estimate of third-quarter productivity growth. Such gains have been robust recently as businesses invest in new technology and artificial intelligence, which could enable firms to raise wages without fanning inflation.

The Institute for Supply Management will also release its October report on the economy’s service sector. The University of Michigan is due later in the week to report consumer sentiment in early November, against a backdrop of an underlying labor market that continues to cool.

Turning to Canada, the labor force survey due for October will follow a surprisingly solid report in September that saw the jobless rate tick down to 6.5%.

The Bank of Canada nevertheless proceeded with a 50 basis-point cut on weak inflation and economic growth, and the fresh jobs data will offer insight into how the labor market is holding up.

The central bank will release a summary of deliberations that led to their jumbo-cut decision and Senior Deputy Governor Carolyn Rogers will speak at the Economic Club of Toronto.

Asia

The week may start with some excitement in South Asia, where Pakistan’s central bank is likely to keep its monetary easing cycle moving at a quick pace with another 2-percentage-point cut, bringing its key rate to 15.5%.

The following day, Australian officials are expected to hold their cash rate target at 4.35% after consumer inflation stayed elevated in the three months through September, cementing notions that policymakers will have to wait before pivoting.

The RBA will also release a new round of economic forecasts that could shed light on the timing of a potential cut. Malaysia’s central bank is seen standing pat on its benchmark rate on Wednesday.

South Korea releases an update on inflation on Tuesday, with figures expected to show further easing, supporting the Bank of Korea’s policy pivot last month.

Consumer-price statistics are also due from the Philippines, Thailand, Vietnam and Taiwan. Japan publishes wage data that may keep the central bank on track for a rate hike late this year or early next, and trade data are due from China, Australia, Vietnam, Taiwan and the Philippines.

Countries publishing third-quarter gross domestic product data include the Philippines and Indonesia.

Finally, China releases key updates on price trends on Nov. 9, with the focus on whether consumer inflation continues to stagger along at a pace just north of zero, and factory-gate prices slide further, after declines deepened in the previous two months.

Europe, Middle East, Africa

The Bank of England decision on Thursday may draw particular attention, coming just after plans for higher borrowing and spending unveiled in the Labour government’s budget pushed UK borrowing costs to their highest in a year.

That tense backdrop isn’t anticipated to distract policymakers from further easing for now. They’re predicted by all 49 economists surveyed by Bloomberg to deliver a quarter-point rate cut on Thursday.

With the budget featuring a fiscal loosening, Bloomberg Economics reckons that quarterly forecasts accompanying the decision will probably show higher growth and medium-term inflation.

Turning to Sweden, expectations for the Riksbank have shifted decisively in favor of a half-point cut to 2.75% on Thursday, after data showed the economy remains in a holding pattern. Output shrank in the third quarter, and the country’s large export sector is becoming more pessimistic.

After almost three years of stagnation, Swedish officials may adopt a greater sense of urgency in aiding growth, especially as inflation has fallen below its 2% target and threatens to remain stuck there unless domestic demand picks up again.

On the same day, Norges Bank is expected to keep its rate at 4.5%, with renewed krone weakness likely to preserve its outlook for no easing until March next year.

Even with underlying inflation slowing, a currency drifting closer to multi-year lows is clouding projections for imported price growth. Norway’s ruling coalition has also drafted a budget for 2025 that’s more expansionary than expected by policymakers, adding to arguments for them to stay hawkish.

Here’s a quick roundup of other decisions expected from around the wider region:

• On Tuesday, Madagascar is set to increase its key rate for a second time in a row to tame double-digit inflation.

• Polish policymakers on Wednesday are widely expected to hold rates steady. But a new projection coupled with the latest string of disappointing data from the economy may prompt them to signal easing is on the way.

• In Botswana, encouraged by the slowest inflation in more than a year, officials are set to reduce their rate on Thursday, the first decision since a shock election outcome ended the Botswana Democratic Party’s 58-year grip on power in the major diamond producer.

• The Czech central bank will hold its rate-setting meeting the same day, with the market betting on another quarter-point rate cut.

• Serbian policymakers will decide between resuming monetary easing or holding rates for a second month, at a time when inflation seems safely back in the target range but risks persist from food and energy prices.

• And then on Friday, Romania’s central bank is expected to keep rates unchanged again at its final meeting of 2024. Officials are waiting for the government to reveal measures, potentially tax increases, to reduce a budget deficit before committing to any more rate cuts.

In the euro zone, industrial data are likely to prove a highlight, with numbers from France, Germany and Italy all scheduled. Several policymakers are slated to speak, including European Central Bank President Christine Lagarde, Vice President Luis de Guindos, and chief economist Philip Lane.

Turkish data on Monday will probably show inflation dipped slightly in October, to 48%. The central bank’s aim is to slow it to the 38% to 42% range by the end of the year, allowing it to start cutting the rate from its current level of 50%.

Later in the week, International Monetary Fund chief Kristalina Georgieva is expected to visit Cairo to discuss an $8 billion loan program.

Egypt has signaled it wants to review targets and timelines of the deal amid regional upheaval, with Houthi attacks in the Red Sea and the war in Gaza leading to reduced Suez Canal traffic and tourism revenue.

Latin America

In Brazil, central bank chief Roberto Campos Neto’s warnings about unmoored inflation expectations, along with rising headline readings, has analysts looking for a half-point interest rate hike to 11.25% on Wednesday.

The early consensus also is for a third straight increase at the central bank’s December meeting.

Banco Central de Reserva del Perú will likely trim the nation’s borrowing costs by a quarter point, to 5%, with inflation running right around the mid-point of its 1%-to-3% target range.

Still, Peruvian policymakers, led by Julio Velarde, have delivered unexpected decisions at five of their last eight meetings, so another surprise is possible.

Colombia’s central bank serves up both its quarterly inflation report and the minutes of its Oct. 31 meeting, where policymakers made an eighth straight rate cut.

Analysts surveyed by the central bank expect 350 basis points of easing from the current 9.75% by the fourth quarter of 2025.

The week will also see Brazil, Mexico, Colombia and Chile report October consumer price data.

With Peru having already posted a higher print for October, it’s likely that of the region’s five big inflation-targeting central banks, only Colombia’s BanRep actually has inflation in retreat, and none have it at or below their targets.

–With assistance from Laura Dhillon Kane, Katia Dmitrieva, Brian Fowler, Robert Jameson, Reade Pickert, Niclas Rolander, Piotr Skolimowski, Monique Vanek and Paul Wallace.

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• Inflation and higher interest rates aren’t going away, veteran strategist Bill Blain says.

• Blain, the principal of Wind Shift Capital, thinks global inflation is entrenched and rates can’t come down much more.

• Higher rates could crush speculative investments, driving a 12% decline in stocks, he said.

Households and companies may be breathing a sigh of relief as borrowing costs move lower, but they shouldn’t get comfortable because rates and inflation are going to remain high — and that reality could spark a big drop for stocks in the next year, Wall Street veteran Bill Blain said.

Blain, a longtime strategist and principal of Wind Shift Capital Advisors, said he sees a rocky 12 months ahead for the stock market. He said the Fed isn’t poised to take interest rates as low as markets think, and borrowing costs could indeed rise from here. That could crimp lending, slow dealmaking, and take US and global stocks down 7%-12%, he told Business Insider in an interview.

“I think the crunch that we face is what happens when interest rates start to rise, and governments are not in a position to continue boosting the economy in an interest rate rising environment because they’ve lost the support of markets,” Blain said.

In the event of a credit crunch, he doubts the US will be able to dole out stimulus as it did during the pandemic, due to concerns about the overall level of debt and the inflationary impact on the economy.

“It’s the reality that inflation is going to creep back into the global economy. Interest rates are going to have to rise,” he said.

Blain’s forecast may sound counterintuitive to investors who have been pricing in ambitious rate cuts from the central bank.

But the US economy faces too many inflationary pressures over the medium-term to warrant aggressive policy easing, Blain said.

For one, the federal debt has swelled to a historic $35 trillion. Economists have flagged rapid government borrowing as a factor that risks stoking inflation.

Meanwhile, supply chain issues linger, and given rising geopolitical tensions, world trade looks on track to be more fragmented, which can also prop up inflation.

Finally, the threat of high tariffs from former President Donald Trump would impose a tax on nearly all imported US goods that economists say would end up being passed on to the consumer.

“I think inflation is going to be more ingrained, as it was in the 1970s and early ’80s,” Blain said. “It’s going to be a very, very different economy and we just need to get used to it.”

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Chevron (NYSE: CVX) is a very well-run energy company. And it offers an attractive 4.3% dividend yield backed by 37 years worth of annual dividend increases. If you are looking for a diversified energy stock with a high yield, it would make a great addition to your portfolio. But if you care more about yield than about diversification, you might be better off with Enterprise Products Partners (NYSE: EPD). Here’s why.

Chevron is what is known as an integrated energy major. The “major” part is related to its size and industry position, noting that, given its $270 billion market cap, it is one of the largest energy companies on the planet. Its business is spread around the world, giving it a material amount of geographic diversification. But that isn’t the only diversification it has.

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The real lynchpin for being called integrated is that a company must have operations in energy production (the upstream), energy transportation (the midstream), and in chemicals and refining (the downstream). These are the three main segments of the broader energy sector and Chevron is a big player in every one of them. If you are looking for a simple way to add energy exposure to your portfolio while collecting a sizable and reliable dividend, Chevron is a great choice.

The one problem is that Chevron’s operation in the upstream and the downstream are highly volatile. That’s because both are driven by commodity products. So Chevron’s financial results can vary greatly from year to year and that can make it hard for more conservative investors to stick around over the long term.

That’s where a high-yield option like Enterprise Products Partners comes in. The yield is even larger at 7.2%. And this master limited partnership (MLP) operates in the most reliable segment of the energy patch, the midstream. It owns the transportation assets, like pipelines, that move oil and natural gas around the world.

The important piece here is that Enterprise charges fees for the use of the vital energy infrastructure it owns. The volume of energy products passing through its system is more important than the price of the products it is transporting. Energy demand tends to remain high even during oil downturns. And, thus, Enterprise’s cash flows are highly reliable. That’s how it has managed to increase its distribution every year for 26 consecutive years. Notably, the MLP’s distributable cash flow covers its distribution by 1.7 times, which means that there’s a lot of leeway for adversity before a cut would be on the table.

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The adoption of artificial intelligence (AI) is continuing at a brisk pace, but some are waiting for the other shoe to drop. A strengthening U.S. economy and robust quarterly results from several AI-related companies helped push the Nasdaq Composite to a new record high last week. Yet these same factors have some investors wondering if the bull market has gone too far, too fast.

Nvidia (NASDAQ: NVDA) has become the de facto standard bearer for the generative AI industry. The company is scheduled to report its fiscal 2025 third-quarter results in less than three weeks, and it’s not an exaggeration to suggest that Wall Street is on pins and needles waiting for the clues that report will offer about the state of AI adoption. Nvidia’s sales have surged since the start of last year, driving the stock up 833% (as of this writing). It’s also less than 5% off the all-time high it touched late last month.

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There’s a lot riding on Nvidia’s upcoming financial report, and many shareholders are wondering whether the stock can possibly continue its breathtaking run. Is it worth picking up shares ahead of its financial report on Nov. 20? Fortunately for investors, data has begun to pile up that could help answer that question.

The key to Nvidia’s astounding successes of the past couple of years has been the performance of its graphics processing units (GPUs), which are the best chips for supplying the specific type of computational horsepower necessary for generative AI, as well as other types of cloud computing needs. The necessary resources and the sheer magnitude of data involved limit the top-tier AI models to the world’s largest technology companies and cloud providers — most of which are Nvidia customers. Comments made in conjunction with those tech giants’ recent quarterly results provide some insights about the state of the AI revolution — and the evidence is clear.

For example, Microsoft (NASDAQ: MSFT) said it spent heavily to advance its AI agenda in its fiscal 2025 first quarter (which ended Sept. 30). The company had capital expenditures (capex) of $20 billion, which primarily went to support “cloud and AI-related” demand. CFO Amy Hood expects Microsoft’s spending spree to continue: “We expect capital expenditures to increase on a sequential basis given our cloud and AI demand signals,” she said.

During Alphabet‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) third-quarter earnings call, CEO Sundar Pichai said, “Realizing [the opportunity] of AI requires … meaningful capital investment.” The company revealed capex of $13 billion during the quarter and suggested there would be “substantial increases in capital investment … going into 2025.”

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