Companies are talking about this election way more than they talked about 2016 or 2020
Politics is front-of-mind for the corporate leaders who say they’ll do well no matter who’s in the White House.
The policies of the next president can always affect companies’ financial future, but this upcoming election seems to be more pressing than usual for leaders at S&P 500 companies.
The number of times “election” or “elections” were mentioned on Q2 earnings calls — measured from Jun 15-Aug 15 — this year was nearly double what it was during the last two presidential election years, according to data from FactSet.
Many of those companies this year cited energy and carbon emissions policies, which vary greatly between Kamala Harris and Donald Trump. A second Trump presidency would be more supportive of domestic oil drilling, at least rhetorically, while the price backdrop will play a bigger role in actual production. It would also include rolling back the Inflation Reduction Act, a policy Harris helped implement and incentivizes electric cars as well as green energy projects.
In fact, this uncertainty over the policy environment appears to be weighing on businesses’ investment spending.
“Some companies—mostly financials, government contractors, and those with exposure to the Inflation Reduction Act—noted this earnings season that either they or their customers are postponing some investment decisions until after the election,” writes Ronnie Walker, senior economist at Goldman Sachs, who flagged that capital expenditures have been lower among firms that have discussed the election. He expects that trend to reverse thereafter.
Of course, many of those executives tried to make the case that they’re positioned to succeed, regardless of who wins.
“Ford has had a lot of history — a lot of experience and wisdom after 120 years of elections,” CEO James Farley told investors, saying that the car company wouldn’t alter its electric vehicle push over “short-term” compliance changes. “It is not a strategy where we handicap the presidential election for the next one and the next one and see what we can get away with the EPA. That is not how we run Ford.”
History suggests that collectively, they’re right. The stock market and earnings usually go up no matter who’s in the White House. But the very fact that companies are talking about this election so much this time around also suggests it might be a bigger deal than they’re letting on.
Updated with comments from Goldman Sachs analyst.
