The U.S. presidential election is just days away. Which candidate is better for the stock market? Surprisingly, we don't think it matters that much. This theory is backed up by historical data. Our review of presidential cycles reveals that the primary driver of stock success is market fundamentals - how well the economy is doing, if inflation is maintained at the low 2%-3% levels, if the labor market remains strong and unemployment doesn't creep up, and if interest rates are lower. This is the best case for stocks and outweighs whoever is in the White House. That said, there are some nuances and implications for individual sectors. For our list this week and next, we look at several sectors and how they might be impacted by America's choice for the next president. Below, we look at the Industrial and Financial sectors and how they might perform under either candidate.

Newmont is the world's largest gold miner. It bought Goldcorp in 2019, combined its Nevada mines in a joint venture with competitor Barrick later that year, and also purchased competitor Newcrest in November 2023. Its portfolio includes 17 wholly or majority owned mines and interests in two joint ventures in the Americas, Africa, Australia and Papua New Guinea. The company is expected to produce roughly 5.5 million ounces of gold in 2024 from its core mines and 6.8 million in total. It is likely to sell a number of its higher cost, smaller mines accounting for 20% of forecast sales in 2024. Newmont also produces material amounts of copper, silver, zinc, and lead as byproducts. It had about two decades of gold reserves along with significant byproduct reserves at the end of December 2023.

Goldman Sachs is a leading global investment banking and asset management firm. Approximately 20% of its revenue comes from investment banking, 45% from trading, 20% from asset management and 15% from wealth management and retail financial services. Around 60% of the company's net revenue is generated in the Americas, 15% in Asia, and 25% in Europe, the Middle East, and Africa.

Two important inflation reports were released this week. Both indicated that overall pricing pressures have retreated, but also confirmed that inflation remains above the Fed's target of 2.0%. Let's first take a dive into the Consumer Price Index. There were some positive results here. According to the CPI report, the overall inflation rate in April of 3.4% was lower than the prior-month's rate of 3.5%. That good news was further supported by a decline in the core CPI rate, which excludes the impact of food and energy and rose at an annual pace of 3.6% over the past year (lower by 20 basis points). What's propping up core CPI? Two main factors: Transportation Services and Shelter, which have stickier prices that don't typically fall sharply. Meantime, pricing pressures for automobiles and food away from home eased. The other inflation report was the Producer Price Index. This news was not as good. The PPI measures pricing trends farther up the supply chain, and showed a modest increase in the rate of inflation. How worrisome is that? Well, we have noted for months that progress will be slow as inflation returns to 2.0%, and nothing was terribly alarming about either of the reports. Looking ahead, we think that the June 2022 CPI rate was the peak reading for the index this cycle, as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed has lifted the feds fund rate from 0.0% to above 5.25% over the past 18 months, and the rate hikes appear to be reducing inflationary pressures. We look for the U.S. central bank to be lowering rates in 2H24 and 1H25 as their concern shifts toward economic growth.