Political Agreements Boost Green Stocks and Semiconductors

PUBLISHED Jul 31, 2022, 12:30:05 AM        SHARE

imgOwen Rust

This week saw good news and bad news on the economic/financial front. In good news, stocks started to rebound! But, in bad news, reports indicate that GDP dropped during Q2, meaning the U.S. has hit the common recession threshold of two consecutive quarters of GDP decline used by many economists. While some analysts point to a rising stock market and announce that we will be okay, many CEOs think that consumer spending will soon slow. So, is there any definitive news out there that can help investors moving forward?

Green Stocks Could Have Strong 2023

Bad economic news has been common in 2022, and that is bad news for the Democratic Party as we approach the midterm elections in November. One complaint among Democrats has been gridlock caused by its more conservative members in the Senate, namely Kyrsten Sinema of Arizona and Joe Manchin of West Virginia. However, Manchin has just signed on to a big spending bill that will invest in clean energy. If the bill passes in its current form, it could mean big boosts for green energy stocks next year.

But before you get too excited, Kyrsten Sinema hasn't signed on to the bill just yet.

Semiconductor Subsidy Bill Could Boost Tech

image description The climate and green energy bill is coming on the heels of a rare political victory for the Biden administration: a semiconductor subsidy bill known as the CHIPS and Science Act. Passed by the Senate and headed to the President, the bill will allocate over $50 billion in federal spending on chip-manufacturing plans. The news has sent domestic chip manufacturer stocks rising, including giants like Intel and Texas Instruments.

If domestic semiconductor chip manufacturing helps ease the current chip shortage, it could also buoy industries that use such chips heavily, such as the auto industry. But while the auto industry may be hampered by recessionary news, semiconductor producers themselves should do well over the next few years with strong federal backing. Over the past decade, there have been longstanding fears that reliance on foreign-made semiconductors, especially from China, constitute a national security risk.

But Pharma Stocks May Slow

While federal dollars may be flowing into green energy and domestic production of semiconductors next year, Big Pharma may see slimmer profits. Part of the big spending bill that will invest in green energy will also allow Medicare to negotiate prices with pharmaceutical companies. The Inflation Reduction Act would immediately put 10 drugs on the price-negotiation table, followed by 20 more in the near future. While this may ding pharma stocks temporarily, don't expect it to be a longstanding slump.

With America's aging population, expect demand for pharmaceuticals to remain strong over the next decade.

Midterms May Return Gridlock, Reduce Subsidies

The two political victories for Democrats may be isolated, as Republicans have been long predicted to win back majorities in both the House and Senate in November. However, recent events have made things more competitive. Now, some predict that Democrats may hold the Senate. Still, we will return to divided government if Republicans win either house of Congress. If this occurs, there likely won't be any big spending bills that invest in particular industries, such as green energy, during the next session of Congress (January 2023 - January 2025).

The economy may improve and boost most stocks, but political gridlock will mean fewer subsidies for specific corporations and industries. In that case, simply stick with your typical investment strategy that uses diversification.

I/we have no positions in any asset mentioned, but may initiate a position over the next 7 days

TXN, Buy

Texas Instrument...
Return: -11.75%

TXN, Buy

Return: -11.75%

Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
Was That ‘The’ Bottom ?

Stock Market Commentary

DIY Investing - Do You Have What It Takes To Succeed?

An outline of my upcoming book on DIY investing. Look it over and see how many of the boxes you can check.

Avoiding emotions on the market

Markets rise and fall and sometimes can even be shut down (who knew?). It should be highlighted that investment in any instruments other than fixed income securities is generally considered volatile.

The Case for Buying the Dip

The case for buying the dip is based on the availability of undervalued assets in a market that has suffered indiscriminate selling.

Fed Day

Better US news from the likes of Google, Microsoft, and Texas Instruments has helped lift sentiment today and is encouraging a more risk-on mood ahead of the FOMC meeting.

Berkshire Hathaway Forecast ahead of Quarter 2 2022 Earnings Report

Berkshire Hathaway announced its Quarter 1 2022 earnings on 30th April. During the first quarter, earnings declined due to slowing economic growth and stock market pullback. Berkshire Hathaway quarter 2 2022 earnings are expected to be published on 5th August. Let's look at the current market trends and Berkshire Hathaway's performance to determine a possible outcome of the quarter 2 2022 earnings.

What Happened to Netflix Stock? Stranger Things About the Netflix Stock Drop in 2022

What Happened to Netflix Stock? A Horrible Series or just a scary episode of the Netflix Stock Drop in 2022? Let's explore everything!

Greenback Jumps Back

With the exception of Japan, Taiwan, and India, the large equity markets in the Asia Pacific region traded higher today.

Who Is The Greater Fool?

To put it in the crudest of terms, a greater fool is someone who is dumber than you. At the poker table, if you can’t figure out who the patsy is, it’s probably you.

Market Musing 7-26-2202, Fed Watch and Tech Earnings Watch

High Volatility: VIX > 23. SPX overall is bearish. Remember that you “can not fight the Fed.” Well you “can not fight the ECB” either.

Mrmd, bros

Headed for substantial growth

What is “Desired” Inflation?

Don’t get me wrong, inflation is a huge concern for those considering retirement, but what can you actually do about it?

Do Trends Exist?

It's not about cycles and trends, but pattern and randomness

Greenback Softens, but Think Twice about Chasing It

Aside from political economic risks, three other challenges are emerging.

Bank of America Stock Price Today - BAC Making Huge Revenues in a Bear Market

Are you hunting the high-value stocks to make high returns even when the pessimism prevails? Bank of America Stock Price Today is just at the lowest level.

Why it’s Time to Start Buying TESLA Long

Is it possible to sell Tesla, the most shorted stock globally, as a potential long buy? On 21 July 2022, Tesla’s stock surged by 10%, attributed to its strong earnings in its Q2 2022 results. The surge was an unpleasant surprise for short traders, who made an estimated mark-to-market loss of over $1 billion.

Does CEO Drama Affect Stock Price?

Elon Musk Affair News Linked to Sell-Off by Sergey Brin

The Fed’s 8-Second Bull Ride

The Fed is on a bull right now, midway through the 8 seconds. The economy is bucking, trying to let gravity and chaos reign above data and order.

Can one make money as an active stock market investor?

In his book, “The Intelligent Investor”, Benjamin Graham describes an Aggressive Investor as an enterprising security buyer who desires and expects to attain better overall results than his Defensive or Passive companion.

Money Market Vs Stock Market

Some folks have asked Piggy whether to start off by investing on the money market or stock market. The fact about the matter is that these are two asset classes with different characteristics.

Resources for Publishers
Resources for New Investors

Boosted with BossCoin