Biden's Out, Harris Is In and That's Good for Trade Desk
As the political landscape shifts, we will continue to focus on policy and its passage when it comes the portfolio.
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* Biden is out, Harris gets the nod, but it ain’t over till it’s over and that includes Congress.
* Raymond James downgrades Estee Lauder. Here’s what we’re watching next for Coty.
Between the 2024 presidential developments yesterday, and the People’s Bank of China delivering some surprise interest-rate reductions, the landscape has shifted at least somewhat from the end of last week. President Joe Biden dropping out of the race and endorsing Vice President Kamala Harris will likely rekindle some uncertainty in the market. In the last few weeks, when we’ve been asked about the election, our view has been we’ve got a ways to go and what may seem in the moment like a probable outcome may not be the result.
While it increasingly looks like we will have a two-candidate presidential race, we still have to get past the upcoming Democratic National Convention. We’ve expected a contentious race, and we think that will be the case even more so now. And of course, that will be good for our shares of The Trade Desk TTD as the Harris campaign looks to get its message out, and the Trump one responds. The same goes for Google's GOOGL advertising business, including YouTube.
When it comes to managing the portfolio, we’ll put politics aside and focus on the policy impact of whoever is in office and the likelihood of it being passed. As we get closer to Election Day, we’ll be mindful of the polls and potential policies, but it won’t be until we know the outcome of the election and the composition of Congress that we’ll have a good idea of the potential policy agenda. Still, between now and then, we could see some renewed volatility in EV-related stocks as well as energy ones. Our thinking is that regardless of who wins the election, certain policies, such as those backing infrastructure spending and the CHIPs Act, will stick around.
China’s trimming of interest rates this morning is its latest effort to support its economy. Recent data for that part of the global economy has shown it slowing, and this move is designed to prop up the economy amid weak sentiment and the prolonged property crisis. Should we see the economy rebound, it would be a positive for our position in the Energy Select Sector ETF XLE, but given the timing of these cuts, the soonest we’re likely to see any impact in the data will be with the August PMI figures that we’ll see in early September.
Raymond James Downgrades Estee Lauder: What We’re Watching Next for Coty
The weakness in China’s economy led Raymond James to cut its rating on Estee Lauder EL to "Market Perform" from "Strong Buy," citing a slower recovery in China and travel retail. As for the connection to the portfolio, let’s remember those are tiny markets for Coty COTY.
While we know the facts, we could see COTY shares get jostled around a bit in sympathy. When LVMH LVMHF reports tomorrow, June 23, we’re likely to hear more about the China market for luxury goods, but we’ll be focusing on LVMH’s comments about fragrance and skincare, looking to confirm those remain standout end markets.
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At the time of publication, TheStreet Pro Portfolio was long TTD, GOOGL, XLE and COTY.
