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Harris and Trump as ‘one and the same’ for the market: Strategist

Skyler Weinand, Chief Investment Officer at Regan Capital, joins Josh Lipton and Julie Hyman on Market Domination to analyze the factors that are top of mind for investors, including the Federal Reserve’s rate cuts, China’s stimulus package and the upcoming U.S. presidential election. Weinand tells Yahoo Finance that he’s been closely watching the Fed’s rate cuts and comments from officials like Fed Governor Michelle Bowman, the only one opposed to the latest cut. As stocks of financial services (XLF) firms trade lower, Weinand explains what the rate cuts mean for the sector. “It’s a little counterintuitive, but these big cuts from the Fed hurt these banks in the short term… financial institutions are hurting because they’re not making as much money on their money and they can’t reduce their deposits as quickly, and yet they still have these loans and investments that are still only yielding 2 to 4 percent.” The strategist says: “People have been talking about the D curve inverting, well, that’s just two years (Treasury yields) to 10 years. Whereas the front of the curve, one-month (Treasuries), three-month, where deposits are going, overnight repo, that has to come down a couple hundred basis points to 3%, where they’re going to be in a year.” He explains: “That front has to get below 4% very quickly before these banks are in the black in terms of where they’ve already lent money versus where they’re borrowing money.” The Chinese central bank announced stimulus measures to combat deflationary trends and stimulate the economy. Weinand says: “Stimulation is great for the market, whether it comes from China or the US, whether it comes from lower interest rates or stimulus, whether Kamala or Trump gets elected, we’re going to see further stimulus versus deficits in the coming years. All of that contributes to the market continuing to roll over and that’s, broadly speaking, worldwide.” “The ultimate goal here on the China front is to keep the economy going and not have the people protesting, not having them take to the streets, not having to worry about losing their jobs, not having to worry about the unemployment situation. And the Fed is in a very similar boat.” In the current economic environment, Weinand says, “you’re not really being compensated for generic fixed income. That’s a stimulant to the stock market,” although he notes, “To say we’re going to go up another 5% to 10% between now and the end of the year is tough. Maybe over the next 12 to 15 months. Definitely.” As the U.S. presidential election approaches, the strategist believes the market sees Vice President Kamala Harris and former President Donald Trump as “one and the same.” He says, “If Harris gets elected, maybe that will have an impact on taxes. If Trump gets elected, maybe that will have an impact on the currency situation between us and Europe or us and China, or when or where tariffs get cut. But the market really sees them as one and the same.” “They’re both going to be stimulants. They’re both going to go into deficits. And you know, so we’re going to have to wait and see what turns the tables, I think, if there’s a sweep. So if you have a Democratic president and both houses of Congress or vice versa, then we’re going to have some microscopes on how that’s really going to affect the market. But the jury’s still out on whether that sweep is going to happen.” For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Naomi Buchanan.