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US Election And Tariff Prospects Set To Threaten Internationally-Exposed Stocks, Goldman Sachs Warns

The outcome of the upcoming U.S. presidential election could significantly impact the U.S. dollar and the performance of domestic-facing versus internationally-exposed U.S. firms, Goldman Sachs analyst David J. Kostin stated in a note released Monday. Election Impact on Markets Investors are closely watching Thursday’s first presidential debate, which is expected to influence betting-based predictions of the election outcomes. According to betting website Polymarket, there is a 57.5% likelihood of a Trump win and a 34.5% chance of a Biden win (FiveThirtyEight currently shows a dead heat between the two candidates). Additionally, there is a 73% chance of Republicans winning the Senate and a 54% chance of Democrats retaining control of the House. The probability of a Republican sweep stands at 42%, nearly double the 22% odds of a Democratic sweep. Historical Performance Trends Goldman Sachs highlighted historical trends where U.S. stocks with a focus on domestic sales outperformed those with greater international exposure by 1 percentage point (pp) the day after Trump’s election and by 4 pp in the following month. However, these domestically-focused stocks underperformed by 9 pp during the 12 months after the election. Among the largest constituents of Goldman ...