-The impact of corporate tax rates will mainly be borne by domestically oriented sectors
-The minimum tax mainly targets multinational companies with intellectual property
-The Tax Cuts and Jobs Act would be very bad if the Democrats came to power
In the U.S. stock market, political developments may matter less to stocks than people think. Even policies with a clear direction (such as tax rates and fossil fuel regulation) can sometimes produce results contrary to expectations. In practice, corporate earnings matter far more than who sits in the Oval Office.
Figure: Profits matter more than politics
The chart above shows the percentage of years with positive total annual returns, comparing bets based on which party was in power with bets based on the S&P 500 earnings cycle from 1928 to 2023. It clearly shows that micro-level factors actually have a far greater influence on the market than electoral outcomes.
2024.10.31