A.merika is in the center of attention these days not only politically because of the events in Washington. With Joe Biden’s presidency soon to begin and the Democrats taking control of the United States Senate, many financial market experts assume that the way is now clear for the implementation of the planned legislative program of the new government under Biden.
For investors, it should now be clear where America is headed: “In the short term, the financial markets will be geared to other planned economic stimulus programs in the United States and, in the long term, to tax increases,” said Paul O’Connor of the investment company Janus Henderson.
In addition to fiscal policy, investors ‘attention will also shift to other areas of the Democrats’ political agenda, such as infrastructure spending, minimum wage increases and stronger regulatory measures for numerous key industries, added the investment professional.
No left shift to be expected
Even Carsten Mumm, chief economist at the private bank Donner & Reuschel, does not believe that there will be an extreme leftward shift in American politics, given the wafer-thin majority of Democrats in the Senate and the significantly reduced majority in the House of Representatives. “This is the best of all cases for the stock exchanges, because we can expect a larger additional fiscal package to stimulate the economy in the near future,” says Mumm.
According to O’Connor, however, the consequences for equities are less clear, as the expected GDP increase will be somewhat impaired by possible higher taxes and stronger regulatory interventions. “On the whole, value stocks and cyclical stocks should develop better compared to growth stocks, momentum stocks and many corona winners,” he said. The professional adds that the prospect of higher corporate taxes, higher bond yields, and concerns about regulatory interference would weigh the heaviest on the media, technology and communications giants. But it is precisely these stocks that have dominated the American stock market indices for months.
“American stocks have fared significantly worse than the world market since August last year. We expect this trend to continue with a clear Democratic victory, which favors a rotation from American stocks to emerging markets and Europe, ”continued O’Connor.
The threat of stricter regulation for the big “big tech” companies is nothing new on the financial markets, but it shouldn’t deter long-term investors for the time being. Because until there is a possible regulation, some time should pass in which money can be made on the stock market with the big tech stocks.
The best example of this is Amazon. The group is developing more and more away from the actual classic online retailer. Amazon is planning to take the logistics of its goods delivery more and more into its own hands and to make itself more independent of external service providers such as Deutsche Post.
The group recently bought a total of eleven Boeing 767-300 aircraft from the airlines Delta and WestJet and plans to convert them into cargo aircraft. Previously, Amazon had relied on leased machines for logistics. From 2022, the eleven purchased machines will belong to the Amazon fleet, thereby improving business and allowing the share price to rise further.
Anyone who invested 10,000 euros in Amazon ten years ago can look back on a portfolio size of more than 185,000 euros today. In view of Amazon’s chart technology, there is no reason to fear that developments in recent years will change so quickly. Amazon is only a representative of the big American tech stocks.
For the time being, stocks that have performed well are likely to remain trump cards for investors who have them in their portfolio. True to the motto “let profits run”, wait and see what really happens in the end with regard to regulatory interventions. If you then, like market expert O’Connor, think outside the box and keep an eye on stocks from emerging markets and Europe, it is never a mistake.