The Politics of Rate Cuts and What to Expect from U.S. Healthcare Stocks Following the

Insights and Market Perspectives

Author: The editor’s desk

September 12, 2024

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A mid-week analysis of what’s happening in global financial markets from the perspective of AGF’s investment management team.

Cut Bait

Many Republicans think the U.S. Federal Reserve (Fed) is attempting to influence the upcoming U.S. presidential election.  Look for former Donald Trump to blast the Fed when the funds rate is cut next week, and when it likely moves again, a day after the November 5 election.

Trump was a proponent of easy money in his first term as president, when he berated Fed Chairman Jerome Powell for being overly restrictive on monetary policy. Now Trump thinks the U.S. central bank should reject a market-friendly rate cut.

Healthy Debate

There hasn’t been the same focus on healthcare this U.S. election cycle as there has been in the past, but some U.S. healthcare stocks could still be impacted by the result, including those managed care names that may be affected by potential changes to current government programs.

While the Democrats seem poised to continue with subsidies related to the healthcare insurance exchanges under the Affordable Care Act, Republicans may dial back subsidies, resulting in a loss of enrollees that has the potential to negatively impact Medicaid-focused managed care companies.

Meanwhile, insurance providers to the country’s Medicare Advantage program may be more adversely impacted by a Democrat victory given the cuts the current Biden administration has already made to the program over the past two years.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.

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