Welcome to Thoughts on the Market. I'm Michael Zezes, head of Public Policy and Municipal Strategy for Morgan Stanley.

Along with my colleagues bringing you a variety of perspectives, I'll be talking about the intersection between U.S. public policy and

financial markets. It's Wednesday, November 20th at 9 a.m.

Eastern. We continue our 2020 election prep this week focusing on the sectors of

the equity market you should follow. financials, energy, health care, and tech.

Relative performance of these sectors versus the S&P 500 could tell you something about what investors think will happen in 2020.

Let's start with financials, where regulation is one of the top concerns for respondents

to our 2020 election survey.

An overwhelming share associated a Democratic win with increased financial regulations.

In contrast, a higher share of investors believe financials could benefit in the first three months

of a Republican second term compared to a Democratic presidency.

The clearly delineated scenarios suggest investors

could value financials higher if they expect a Republican win and vice versa with a

Democratic win. The same could be said for energy where a majority of those surveyed see energy benefiting in the first three months of a Republican win, while in a Democrat win scenario most investors see no change.

Tech is a similar story where survey results show investors associate a Republican win with higher technology

valuations and the Democratic win with lower technology valuations.

Survey respondents also had this view with regard to health care.

However, this is one area that's in clear contrast with our own views.

As we've discussed on previous podcasts, we expect policy choices to follow a more moderate path

than is outlined by the presidential candidates

because a Senate majority is likely to be slim for either party which increases the influence of

moderates.

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