Election day is right around the corner and the markets are sitting on edge. With a new president and administration, investors can expect some major changes that could ripple through the stock market and potentially lead to targeted exchange traded fund opportunities.
For instance, Republican nominee Donald Trump has called for cutting back on regulations that have gripped the financial industry in response to the 2008 financial downturn and favored expanding the military in the ongoing fight against terrorism.
Trump has said he would “dismantle” financial reform, or the Dodd-Frank financial reforms, that have caused big banks to take on increased capital requirements to obviate another depression event associated with high-risk debt. On the other hand, Democratic runner Hillary Clinton has defended Dodd-Frank as a means of cracking down on perceived risky banking practices.
With Trump in office, investors may look more favorably on banks and financial stocks, along with sector-related ETF options like the SPDR S&P Bank ETF (NYSEArca: KBE), which targets some of the largest U.S. banks, or the broader Financial Select Sector SPDR (NYSEArca: XLF), which includes a hefty bank sub-sector tilt, along with other financial services names.
Trump has also called for the elimination of the sequester on defense spending and increasing military spending to bolster troops and the number of war vehicles in an attempt to prepare the country against the number of treats we continue to face. The nominee has also stressed the need to upgrade current defense systems, such as modernizing Navy cruisers.