What Sectors Will Emerge After The Election

If you were looking for a slow news day, you were disappointed.

Barack Obama’s held his historic Greek-column-adorned concert last night in front of 84,000 screaming fans. The first African-American candidate from a major political party accepted his party’s nomination as he assured supporters he was the guy for the job. With sufficient pomp to fill a Broncos’ stadium, the Democrats pulled off a logistical coup on the final night of their convention. Obama, their President-in-Waiting, was the man of the hour.

But wait, something just happened.

A woman just appeared on the radar. Not more than 72 hours after Hillary Clinton relinquished the spotlight to her primary season opponent, another female has taken the stage. As if by magic, John McCain transferred media attention away from Denver to Dayton. Ascending the steps of an Ohio platform, the Governor of Alaska, Sarah Palin, just became the Vice-Presidential candidate for the Republican Party. The virtually-unknown VP hopeful will now square off against the legendary Delaware Democrat, Joe Biden. Such is life in election-year politics.

And In This Corner, We Have…

Putting aside the political drama, let’s consider investor sentiment once the votes are tallied. How will a McCain-Palin or Obama-Biden administration affect the market after November? In essence, what sectors stand to benefit most from a Republican or Democrat presidency?

First off, the Republicans.

McCain-Palin: An Energy / Energy Services Pick

John McCain reaffirmed his stance on domestic energy production with his Sarah Palin pick today. The Governor strongly supports drilling in ANWR which dovetails with McCain’s push to expand offshore drilling. This is a tricky play since both policies could be construed as too cozy with Big Oil. Still, both McCain and Palin have been distancing themselves from the popularly-maligned sector.

If McCain and Palin are elected in November, we see both energy and energy services stocks gaining, especially if the public is weighed down by high gas prices. The Democratically-controlled Congress will be forced to concede as pressure mounts from cash-strapped constituents. This would be a boon to domestic energy production and services.

ETFs like United State Oil Fund (USO), SPDR S&P Oil & Gas Equipment & Services (XES), and iShares Dow Jones U.S. Oil & Gas Exploration (IEO) should do very well during a McCain administration.

Now for the Democrats.

Obama-Biden: An Alternative Energy Pick

The Democratic Party is completely sold on Global Warming. Alternative fuels are closely tied to the idea. According to proponents, alternative energy sources like wind, solar, and biofuels, help reduce carbon emissions. This reduction ultimately fights Global Warming and thereby saves the environment. The Green movement has picked up steam in the last couple of years. Obama and Biden stand to gain from these developments.

Barack Obama is fully committed to an alternative energy philosophy. As a Senator in Illinois, he’s already pushed an increase the nation’s ethanol production. Don’t expect drilling in Alaska’s Arctic National Wildlife Refuge under an Obama presidency, but expect government subsidies to the Alternative Energy complex. A Democrat administration will push through legislation fostering alternative sources of energy apart from crude oil.

We expect ETFs like PowerShares WilderHill Clean Energy (PBW), Market Vectors Global Alternative Energy (GEX) and Claymore/MAC Global Solar Energy (TAN) to rise if Obama is elected.

Until next time, enjoy the Labor Day Weekend roundup on the news outlets. And, of course, time with your family.

Have a great weekend.