If you want to get your head around the ultimate outcome of the election, you should ignore the media, experts, pundits, and focus on one thing…
If you want to get your head around the ultimate outcome of the 2020 Presidential election, you should ignore the media, experts, pundits, and focus on one thing.
The energy sector.
Unlike the pundits, experts and shills in the media, energy investors LOSE money if they’re wrong. They have “skin in the game” so to speak. And because of the distinct differences between the Biden and Trump campaign’s views on oil, the energy sector is an incredible barometer for how things are going with the election.
From a 20,000-foot perspective, this Presidential election is about globalism vs. nationalism.
Globalism, as represented by the Biden campaign, represents the dominant economic trend of the last 40 years. Its key features involve:
1) The outsourcing of Americans jobs to cheaper, international labor markets.
2) The U.S. relying extensively on other nations for its energy, commodity, and other needs.
3) The U.S. as one of several key nations that set global policy via international bodies (the U.N. the G-7, etc.).
By way of contrast, Nationalism, as represented by the Trump administration, represents a complete refutation of Globalism. Its key features involve:
1) That the domestic production of resources deemed critical to the U.S. economy is a matter of national security.
2) That outsourcing weakens the U.S. economy from a strategic perspective as it shifts its industrial and manufacturing supply chains to other nations.
3) That the U.S. is THE dominant force in the world and as such can set global policy regardless of what other nations desire.
In far simpler words, a Biden win would be BAD for oil production in the U.S., while a Trump win would be GOOD for oil production in the U.S..
With that in mind, take a look at this chart.
Going into election night, the energy sector was in a decided downtrend (blue line) as it looked like Biden would be the presumed winner. However, on election day this trend began to end with energy stocks actually breaking out of this downtrend briefly (red circle).
This suggested that in point of fact, President Trump would potentially pull another historic upset.
We all know what has since happened: the media has declared Biden the winner despite a number of voting irregularities surfacing (and that’s putting it mildly). The media has made it clear that it believes Biden won.
But what is the energy sector telling us?
Energy stocks are up 15% since election night. That is an incredible move. And if you find that surprising, consider the following.
The energy sector is top performing sector since election night.
I don’t know about you, but it sure seems as if energy investors are predicting a Trump win. Nowhere in Joe Biden’s campaign platform does he advocate for the increased production of oil in the U.S.. In fact, on his website he actually endorses the Green New Deal, which advocates for the U.S. completely moving off of fossil fuels!
With that in mind, what do you think energy stocks are telling us today?
Chief Market Strategist
Phoenix Capital Research