The core of this year's US election is Sweep! To win big!

I attended the $BlackRock(BLK)$ Private Equity Summit today, which was quite rewarding.

Blackstone's chief economist believes that the Fed's rate cuts will be less frequent and smaller than expected, and that inflation is likely to restart next year, with a new round of rate hikes beginning in October 25.

The core of this year's US election is Sweep! To win big! Neither side wants to just win the White House, not a small win but a big win, and both sides are shouting to sweep the White House and Congress!

Doing well on the fiscal front is critical. Neither Trump nor Harris has prioritized fiscal discipline, and the US federal deficit is likely to remain around $2.0 trillion per year for the next few years. Whether the deficit situation can be changed depends on a Republican or Democratic victory in the 2024 election, as this will bring a unified Congress to the new president.

The proposed changes in the corporate tax rate are a key differentiator in financial markets. Harris proposes to increase the corporate tax rate from the current 21% to 28% (according to our estimates, the impact on $.SPX(.SPX)$ EPS is -6%), while Trump proposes to reduce it to 15% (the impact on S&P 500 EPS is +5%). This requires action from Congress, and changes are only possible in the event of a comprehensive victory in the election.

Tariff and immigration policies rely more on executive action than on Congress. Price increases from tariffs could exacerbate inflation, leading to a one-time price increase, although persistent inflation is less likely. Tariffs could also disproportionately affect lower-income groups. Our U.S.-China tensions newsflow indicator has risen several times during both Republican and Democratic presidencies.

Based on our estimates, a Republican sweep would result in slightly higher GDP growth in 2026 and 2027 than a Democratic sweep. The faster growth would come from tax differentials and reduced regulatory burdens. However, faster growth could lead to higher inflation, which could be exacerbated by price pressures from tariffs and restrictions on immigration.

Wall Street has already recalibrated its outlook for U.S. stocks in light of the election results, focusing on top-down trades and stocks sensitive to potential Democratic and Republican policies. In addition, we highlight the key sectors that Bernstein Research analysts view as most sensitive to the U.S. election.