The clock is ticking and its time to start thinking about investment opportunities. The US Presidential Election is 3 weeks away and regardless of which candidate you support, the best investments will be driven by policies. Stocks hit record highs during President Trump’s first term and if he is re-elected, there may be some initial volatility but once the dust settles and his second term is confirmed, there may be a period of consolidation followed by renewed gains for equities. President Trump’s policies are good for capital markets and businesses but the problem is that stocks are priced to perfection and the upside could be limited. The good news is that a vaccine is right around the corner with implementation expected in the first quarter. Positive vaccine headlines can take stocks to fresh highs easily on hopes of a return to normal business activity.

1) Sell China

The most obvious trade is to sell China. In 2016, President Trump campaigned on rectifying China’s unfair trade policies. Over the past 4 years, this promise has been fulfilled thoroughly. Punishing tariffs drove US-China relations to their lowest points in decades and restrictions on business activity turned a trade war into a cold war. He’s ushered in a new wave of harsh political criticism of the world’s second-largest economy. Biden is also expected to be tough on China but a Trump victory would suck out any hope for a more diplomatic approach towards China. There are a number of ways to sell China. ETF traders could buy inverse / short China ETFs. CFD traders could sell the China 50 or HK 50 Index and forex traders could buy USD/CNH.

2) Big Oil Loves Trump

It’s no secret that the Trump Administration has been kind to the oil and gas industry. From rolling back emission standards to rejecting stronger pollution laws, lowering taxes, and opening the Arctic National Wildlife Refuge to drilling, he’s done everything in his power to support oil and gas companies. As the pandemic took energy prices sharply lower, he made funding for the struggling industry a priority. D emand and oversupply remain a problem and for many energy producers, , crude prices are at their lowest level in more than a year. While Trump cannot affect the world’s demand for oil, he can certainly lower taxes or deregulate the industry further. There are a number of ways to buy oil from oil ETFs to oil CFD and stocks like Exxon Mobil (XOM). XOM is trading at its lowest levels in more than 15 years and with a dividend yield of 10%. While this dividend will probably decrease, it is generous compared to other companies. and even if it was cut in half it would still represent an outstanding rate of return in low yield world

3) Banks Love Trumps

Bank stocks performed particularly well the first year after Trump’s 2016 victory. When markets were plunging back in August, President Trump was quick to call on the CEOs of the nation’s three biggest banks to see how he could prop up the market. While low-interest rates squeeze the margins for banks, the prospect of lower taxes could be another boon for this industry. Bank stocks in general do well under Republican Administrations.

Lastly, any companies with ties to Trump should perform well. Caterpillar (CAT) and John Deere (DE) are two companies the President favors for building his wall. If he doubles down on these efforts in the second term, it would be a boon for both companies. While it is not clear if Oracle will seal the deal on its bid to buy TikTok, founder Larry Ellison has close ties with the President and will receive a preference on global business deals.

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