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From Wall Street to the weeds, American companies prepare for life in purple

American companies have had plenty of time to consider what Joe Biden’s presidency would mean for them. Here’s a closer look at what will shape the agenda for the various industries.

Wall Street regrets

The currency business has avoided the green wave, but a purple ripple could change that. Entering the election, the worst case scenario for banks like JPMorgan, Goldman Sachs or Citigroup is that Democracy wipes out both arms of the government. That would provide a clear foundation for ideas like break-ups by major lenders or proposals to limit repurchases and impose taxes on financial transactions.

Those things are unlikely to disappear now. There̵

7;s also nothing to worry about about the many complicated regulations – especially since Republicans have done very little to unravel post-crisis protections in the first place. And while President-elect Biden will put his people to run financial regulators, those people will likely have to get past the rallying of censors, even as Democrats try. gain control of the Senate. Finance industry executives may even be on the shortlist, and the revolving door will still spin.

Another sensitive topic is taxation. Biden’s proposal to increase corporate income tax rate to 28% from 21% will affect financial institutions like most companies. But his talk about increasing the personal ratios of the top moneymakers and raising capital will affect finances, with a large concentration of wealth, very difficult. That also faces heavy dilution. Every Senate vote counts, and many rely on Wall Street employees for votes and contributions.

Poor infrastructure

An old joke in Washington of President Donald Trump is that every week is infrastructure week, but no major plans have been announced. Biden has promised a $ 2 trillion program focused on clean energy, creating well-paid jobs and being fair in where and how to invest.

Trump has cut off the red ice forest that could choke private sector infrastructure projects, increasing hope in companies investing in such things, like Brookfield Asset Management and Blackstone. The Biden’s manifesto makes it seem like Democrats might let some of them grow again. That may be relevant, for example pursuing a carbon-free power generation sector in 2035. Tax breaks and other incentives could encourage investment. One danger, however, is the burden on DC’s budget.

An analysis from the Wharton School notes that increased federal spending on infrastructure may allow states and cities to invest less – but such projects will drive productivity and therefore wages. and GDP. Trump has left a lot on his to-do list for Biden. And to mobilize large reserves of cash to wait for opportunities, states and localities may need to be more friendly with the private sector. Done right, investing in infrastructure comes with payback.

Back to the bus

Public transport may have had a tough year as Americans dodged crowded buses and trains – but it was a big winner on election night. Voters across the country have adopted voting measures to finance better traffic. In Austin, Texas, about 60 percent of voters in favor of raising property taxes will, among other things, fund more railroads and buses. Many other regions have followed suit, such as Virginia’s Fairfax County, which has approved a loan to pay for transportation improvements and California’s Sonoma County, which has voted to maintain sales taxes to implement Updates such as bus service extensions. Biden was also an evangelist for Amtrak trains, which he traveled almost daily between Delaware and Washington for 36 years.

Is promoting public transport harmful to the private sector? Unnecessary. Leading car companies, such as Ford Motor $ 31 billion and General Motors $ 53 billion, will continue to turn to electric cars regardless of who is elected president. The Biden administration may mean tougher emissions standards, but is less concerned about the discrepancy between the regulations in the vast free state of California and the rest of the country. And manufacturers should be less concerned about rising raw material costs due to unpredictable tariffs or trade policies disrupting supply chains. Vehicle modernization can move to a higher level.

Greener energy

Biden has called for a “transition” from oil and other fossil fuels – but his plans do not call for a ban on production. Instead, it is committed to keeping the polluters at the cost of carbon emissions and offering large investments in green technologies.

These actions merely repeat the position of the market. The costs of producing green energy are falling continuously and driven more by technology than by policy. Solar panels, batteries and wind turbines are becoming more and more efficient and cheaper, allowing them to compete with fossil fuels in electricity generation today and shipping tomorrow. Trump promised to end the “war on coal” and roll back environmental regulations to encourage both production and use. However, US coal production this year is expected to be about 30% lower than when he first took office, as utility companies shut down uneconomical power plants.

Even without the support of the Senate, Biden could still be influential. When Trump pulls the US out of the Paris Climate Agreement, Biden could bring it back. How government agencies interpret pre-existing rules is very important and comes from the top. Companies that have moved away from highly polluting fuels are on the right track politically. For joint stock companies like Exxon Mobil, the writing on the wall.

Eat, drink, have fun

Consumer goods companies will keep an eye on a big – or possibly small – solution: to stimulate demand. The Covid-19 relief package passed in the spring included a check of $ 1,200 and an additional unemployment benefit. The results of that are clear. In April, 64% of adults said they could find $ 400 in cash to respond to an emergency, but that number jumped to 70% in July, according to the Federal Reserve. Companies from Clorox to Kraft Heinz report strong sales – and consumers trade items with higher margins.

The big question is how much help is on the way. Democrats and Republicans differ in the amount of stimulus needed, with numbers ranging from $ 500 billion to more than $ 2 trillion. With fragile, or no, Senate control, Democrats may have to hold back expectations. The position of the outgoing president is also important, as he remains in office until January. But all parties will realize that the cost of doing nothing is high. After the $ 600 weekly increase in unemployment payments ended in July, consumer spending has slowed.

Smoke rose

The legal cannabis industry took new roots in 2020. Voters in New Jersey, Arizona, South Dakota, and Montana approved cannabis for recreational use. Without clear Democratic leadership in the Senate, however, the prospect of a federal law allowing green-lighted weeds is slim. In short, this should be good for the product, if not good for the companies that make it.

Putting New Jersey into the ranks of states that allow adults to buy and consume marijuana is a big step. It increases pressure on neighboring states like New York to do the same or see potential tax currencies leak. Illinois, for example, estimates that about a quarter of marijuana sales occur out of state.

But if there are no laws allowing weed companies to use nationally chartered banks – or deduct their costs from taxable income – the industry will struggle to make payments. Attractive investment that large organizations want to own. No major changes in the short term are expected. Furthermore, the smoke signals are very clear.

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