These sectors will ‘survive’ the 2024 elections: expert

With several catalysts for the 2024 presidential election looming: The verdict in Trump’s silence trial and the selection of Trump’s vice presidential running mate will both take place in the next two weeks. TD Cowen’s deputy head of research, Lisa Thomas, joins Catalysts to share her thoughts on how investors should prepare their portfolios as Election Day approaches.

Thomas suggests that investors focus on themes that will survive the presidential election and deliver long-term returns: “We have a huge focus on AI infrastructure. What are all these architectural improvements and improvements that are needed to really drive the AI ​​use cases that everyone wants? For example, we modernized Credo Technology (CRDO), a mid-market company that works to increase speeds in data centers. Microsoft previously dealt with high customer concentration (MSFT) and Amazon (AMZN), but the scope is much broader. We think investors are becoming more accepting of these types of infrastructure names,” says Thomas.

For more expert opinions and the latest market news, click here to watch the full episode of Catalysts.

This post was written by Nicholas Jacobino

Video Transcription

The 2024 elections could pose a significant risk to markets in the second half of this year.

This summer, we had a packed schedule: Trump’s sentencing in his New York silence trial on July 11, the Republican vice presidential election on July 15, and the second presidential debate on September 10.

So how should investors prepare for all these key events?

Will you join us to talk?

We have TD Cowens, deputy head of research, Lisa, thank you so much for coming.

I know you have a list of mid-cap ideas here.

You have sections on Washington’s policies for 2024.

I’m curious, from your perspective and that of your colleagues, which candidate could potentially deliver greater gains in the SMD cap space, given the potential policies they could implement after November 5th.

That’s a great question.

But you know what I will say, Madison is what we really focused on, are the names and the topics that will really endure, regardless of which party and which candidate wins the White House and Congress.

Because, as you pointed out, there will be a lot of catalyzing factors between now and the election, there will be a lot of noise in the cycle.

Uh, can I use my favorite phrase, which is the one that rates it at 11 on a scale of 1 to 10.

So I would say we’re really, really focusing on investments and themes that are going to have the ability to survive a long cycle.

The story continues

You know, whipsaw no matter who’s on site.

Because on these issues, we think there is a huge amount of bipartisan agreement, if we’re talking about issues like we’re talking about, decoupling China from manufacturing, if we’re talking about protectionism and industrial policy, and by the way, deficit spending, because despite the rhetoric that says you came here on both sides, we think it is very unlikely that lightning will strike the defense fund at a time when we see such geopolitical risks on so many fronts.

So rather than focusing on which party is going to be, you know, the best driver of mim stocks, we would argue that there are a lot of great sm CAPP opportunities regardless of who’s in the White House.

So what approach should investors take as they enter this busy cycle so as not to be scared away by the noise, as you call it?

Yeah, look again, I think it’s really focused on long-term themes.

So if we look at industrial policy, the topic of artificial intelligence is certainly on everyone’s mind and on everyone’s lips, and we are increasingly looking at second and third use cases of artificial intelligence.

But in the meantime, we are placing a huge emphasis on AI infrastructure.

What are all of these architectural improvements and enhancements that are needed to truly support the AI ​​use cases that everyone is waiting for?

For example, we have improved Credo technology, which is the SM name in the space where they work to increase speeds in the data center.

Previously, customer concentration was large between Microsoft and Amazon, but now that gap has widened significantly.

And we believe that investors are increasingly willing to invest in infrastructure companies.

Digital Bridge is another name that supports large-scale data center operators or data center operators with a portfolio of companies operating in the digital infrastructure space.

We increasingly think that by looking at names that are really tied to these long-term themes, we can cut through all that noise and see what happens, just like we all do.

Well, certainly, you know, especially after last week’s debate, the endless headlines, the endless noise.

We don’t think you’ll win at investing if you get stuck there.

Focus on what will be important no matter who is in the White House, no matter who is in Congress, and what will matter with some real permanence over the next few years.