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Profiting With Split Government 

Thanksgiving is here in two weeks! 

On behalf of your Team at Prosperity Financial Group, we wish you and your family and happy, healthy and safe Thanksgiving. 

Enjoy your meals in person or virtually with your friends and family.

- Elliot Kallen &

The Team at Prosperity Financial Group

Politics is a daily moving target. Every two to four years, our world can turn upside down. The big issue for us is to find ways to make money for our clients no matter who is President.


1. Election Updates

On January 20th, we will have a Democratic President, Republican-led Senate and a Democratic-led House of Representatives. This is a divided government and each side has experienced both victories and losses. 

Let’s talk about what you can expect—change probably won’t happen until late 2021.

president biden will likely use his Executive Powers to begin restoring president Obama's regulations.

  • This will put pressure on the Oil and Gas Sectors. It may be unprofitable to continue fracking in this country, which could increase Middle East oil imports. 
  • The Health Care and Pharmaceutical Sectors will feel pressure to control costs with the possibility of Universal Health Care. However, finding a cure and vaccine for COVID-19 will keep this Sector relatively hot for the time being.
  • Interest Rates will continue to stay low putting pressure on the Banking Sector. Earning money on Bonds, Bond Funds and CDs will definitely be challenging.
  • We should have an Infrastructure bill in 2021, which will help the construction industry

so, the upcoming winners most probably are:

  • Technology
  • Infrastructure companies
  • Electric cars
  • Solar &  Wind companies
  • Marijuana (Cannabis) will probably become legal

keep in mind...

Of course, the “devil is in the details” and, as what happened in 2009, we will have to see what percentage of federal handouts will actually go to inner-city projects, roads, etc. rather than propping up cities and states’ pensions. 

2. COVID-19 Updates

Very shortly, we should have another Coronavirus relief bill. You will want to be invested when it passes.

Should there be more pressure to close down parts of the United States due to COVID-19, this will really help out the Tech Sector just as great as it did in 2020, and put more downward pressure on energy, food and leisure.


3. Geopolitical Updates

Expect President Biden to join the Paris Climate Accord (again, more downward pressure on the US Energy Sector) and the Trans-Pacific Partnership (which may put pressure on China to open trade).

Given Mr. Biden’s openness to China, we will see where this goes. But for large and medium companies that benefit from global trade, this could be good news.

what to keep an eye on in china

  • US companies still cannot open in China without giving ownership and secrets to the Chinese Government. Trump tried to change this, but it remains.
  • China continues to be the world’s most aggressive country and they have the power to control all shipping, wealth and defense in the China Seas, both South and East. It would be virtually impossible to stop them should they decide to reclaim Taiwan through force, and I believe the West would turn a blind eye to this for the sake of trade and appeasement (1930s history repeating??). We will reinstitute a new trade policy with China should this invasion occur. This could create massive short-term volatility in the markets.

 

In Conclusion...

We are watching your accounts and portfolios meticulously. We plan to closely scrutinize changes in the political landscape and find ways to take advantage of opportunities. You should expect volatility and, although there is short-term pain in values decreasing, these also signal opportunity. 

 

Call us anytime at 925-314-8503 or email me directly at [email protected]


Best,

Elliot Kallen

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