Cannabis, Defense and Infrastructure to Benefit from Congressional Gridlock
As predicted, Democrats wrestled away control of the house and Republicans gained ground in the Senate. The GOP clearly has an understanding of how to reach rural voters, while angst and vitriol brought urban and suburban voters to the polls leading to a wave of blue in the house. Politically, this now means the House will likely become a raucous investigatory body led by Nancy Pelosi checking President Trump,whereas the Senate floor will now be a slick runway for filling judiciary seats. As an important aside, the Sun Belt – Texas, Georgia and Florida – brought Democrats political heartbreak as progressive candidates fell short of their goals.
“Let’s be clear… Both parties are broken,” former George W. Bush strategist, Karl Rove said on Fox News during their marathon election coverage. This poisonous, gridlocked Congress is what the markets predicted, and, at dawn, the dollar dropped, futures rose and Treasuries were climbing. As we stated yesterday, markets like political gridlock and, with our current D.C. scenario, history predicts 12% annual returns. There is still the possibility of near-term volatility, but if GDP remains steady and unemployment stays low, then markets could continue their run. Verdict is still out on the long-term effects of Tax Cuts and Jobs Act, but the S&P 500 has a perfect environment to make gains.
In that vein, here are 3 stocks to watch in sectors we think will benefit from the gridlock:
Raytheon
With the Defense budget largely set for the near future, stocks like this Massachusetts cyber-defense company are a buy. Raytheon
U.S. Concrete, Inc.
One thing that both sides of the aisle might agree upon is infrastructure. U.S. Concrete
Auxly Cannabis Group, Inc.
Cannabis scored more wins election night. State referendums opened doors for Missouri and Utah for medical purposes, and Michigan became the 10th state to legalize for recreational purposes making it the first in the Midwest. There are many names to choose from in the space, but Auxly Cannabis