2024-11-01 10:20:00
Investing.com – In a recent report, investment bank Raymond James analyzed possible political actions that could influence markets in 2025, regardless of the outcome of the upcoming US presidential election.
The company expects strong fiscal stimulus, reduced regulatory measures, energy licensing reform and continued technology restrictions as key factors that could occur regardless of who wins the election.
The report highlights that a sizable portion of Biden-era funding for infrastructure, semiconductor manufacturing and the energy transition has yet to be used, with more than 75% of allocated resources available by the end of September.
Tax credits under the Inflation Reduction Act (IRA) also remain widely available, with about eight years to take advantage of them. Raymond James estimates that these incentives represent more than $800 billion in allocated funds and more than $500 billion in unused tax credits in the U.S. economy.
“Attempts to revoke parts of the IRA could occur if Trump wins, but we are skeptical,” analysts led by Ed Mills said in the report. “Overall, we expect strong fiscal stimulus for the economy, regardless of the outcome of the election.”
Energy licensing reform is also on the horizon, with bipartisan support and growing demand from the AI industry increasing the likelihood of legislative change.
Raymond James is closely following the debate over the 2025 debt limit, which could serve as a legislative platform to advance energy licensing reform. Additionally, recent Supreme Court rulings are expected to streamline environmental reviews under the National Environmental Policy Act, speeding up the permitting process.
The report also suggests that in four years there will be less regulation in several sectors due to recent Supreme Court rulings.
According to the report, decisions such as reversing “Chevron deference” and establishing the “bigger issues doctrine” will limit the expansion of regulatory power.
“The case that reopened the statute of limitations for all the rules will be the way to overturn the existing rules. This will take time but will benefit highly regulated industries,” the analysts noted.
At the same time, support for critical minerals is expected to increase, with a focus on reshoring supply chains and domestic production of minerals essential to national security. While this initiative is still in development, it could garner similar support to that received by the semiconductor industry in Washington, D.C.
Another bipartisan issue, technology restrictions, especially regarding sales to China, are likely to continue.
Analysts note that a Trump administration could pose greater risks to the sale of traditional technologies, while a Harris administration would tend to maintain a policy of gradual restriction.
As for geopolitical risks, Raymond James expects US and NATO defense budgets to increase regardless of who wins the election. The company predicts that global threats will require robust defense spending, under both the Trump and Harris administrations.
Finally, looming fiscal challenges, including the debt limit and the expiration of individual provisions of the 2017 tax law, are expected to dominate the agenda in 2025.
Raymond James predicts that following passage of a tax package, there will be a high likelihood of increasing the child tax credit and reinstating R&D tax credits and bonus depreciation, regardless of election results.
“We expect the debt limit to be high, but will watch the impact on US Treasuries,” the report concludes.
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Interview between Time.News Editor and Expert
Time.News Editor: Thank you for joining us today to discuss the recent insights from Raymond James regarding the upcoming political landscape and its potential impact on the markets in 2025, irrespective of the outcome of the presidential election. To start off, can you summarize the key findings of the report?
Expert: Absolutely, I’m glad to be here. The report identifies several critical factors that are likely to influence the U.S. economy and markets in 2025. Regardless of whether President Biden or Donald Trump wins, we can expect strong fiscal stimulus, a reduction in regulatory measures, significant reforms in energy licensing, and sustained technology restrictions. These elements are interconnected with the continuing fallout from Biden-era policies.
Editor: That’s fascinating. What specific areas of fiscal stimulus does the report emphasize?
Expert: The report points out that a significant portion of funding earmarked during the Biden administration for infrastructure, semiconductor manufacturing, and energy transition projects remains untapped. Specifically, over 75% of these funds were still available by the end of September. Also, it highlights the vast potential of the Inflation Reduction Act (IRA), which includes around $800 billion in allocated funds and over $500 billion in unused tax credits that span approximately eight years.
Editor: It’s intriguing to think about how much funding is still in play. Does the report suggest that any political actions could modify or challenge these initiatives, particularly if Trump were to win?
Expert: Yes, the analysts express skepticism about any significant attempts to revoke elements of the IRA, even if Trump were to win. They firmly expect that strong fiscal stimulus will remain a priority across the political spectrum. The bipartisan support for energy licensing reform is another encouraging sign that many of these policies will continue to be implemented.
Editor: Talking about energy licensing reform, can you explain its importance and what might drive its acceleration?
Expert: Energy licensing reform is paramount, especially as the demand for cleaner energy escalates and intersects with technology advancements, particularly AI. The report indicates that bipartisan support could push these reforms through, and interestingly, upcoming debates over the 2025 debt limit might serve as a legislative platform to catalyze these discussions. Additionally, recent Supreme Court rulings are expected to simplify environmental reviews under the National Environmental Policy Act, which should speed up the permitting process for energy projects.
Editor: That’s a significant point! Regarding regulation, the report indicates a potential reduction in regulatory power due to recent Supreme Court rulings. Can you elaborate on that?
Expert: Certainly. The report suggests that the reversal of “Chevron deference” and the establishment of the “bigger issues doctrine” indicate a shifting landscape for regulatory authority. These judicial changes could effectively limit the expansion of regulatory power and create a more favorable environment for industries that have been historically burdened by heavy regulations. Essentially, existing rules could be challenged more effectively, thus allowing for a broader range of activity in those sectors.
Editor: It sounds like we might be on the cusp of a major transformation in the regulatory landscape. How should investors prepare for these changes as we approach 2025?
Expert: Investors should remain vigilant and informed about these developments. Understanding the sectors poised for growth due to fiscal stimulus—like infrastructure and technology—is crucial. It’s also important to keep an eye on regulatory landscapes, as less regulation might create opportunities in industries that have been heavily constrained. Furthermore, with substantial amounts of unallocated funds under the IRA, savvy investors could benefit from positioning themselves in markets that are likely to see waves of investment.
Editor: Thank you for your insights. This conversation really highlights the potential shifts we may see in the markets due to political actions. Any final thoughts you’d like to share?
Expert: I think it’s crucial for both investors and the general public to stay engaged and informed about the shifting political landscape. The decisions made in the upcoming election, along with the legislative actions that follow, will play a significant role in shaping our economic environment in the next few years. Staying proactive will be key to navigating those changes effectively.
Editor: Thank you for sharing your expertise with us today. This will certainly help our audience understand the potential financial landscape ahead.