As the U.S. election nears, Wall Street strategists are analyzing the economic consequences not just of who wins the presidency, but of a major proposal involving Elon Musk. If former President Donald Trump secures victory, he has pledged to establish a government efficiency commission led by Musk, the influential CEO of Tesla Inc.
Musk’s ambitious plan to slash $2 trillion from the U.S. federal budget has investors on edge. This proposed reduction is larger than the annual operating budget of key government agencies, including defense and social programs like Medicare and Social Security. Piper Sandler & Co. has responded by listing 100 companies that could be significantly affected, with major players such as Boeing and General Dynamics among those sensitive to changes in federal spending.
Michael Kantrowitz, a top-ranked strategist at Piper Sandler, noted that many clients have expressed concerns about how potential budget cuts could impact businesses that depend on government funding. “The Elon headlines had clients asking about which stocks would be at risk of major cuts,” Kantrowitz said. The list includes companies across sectors like aerospace, biopharmaceuticals, and defense, featuring names like Moderna, CVS Health, and Honeywell.
However, not all companies are at risk. Kantrowitz highlighted that defense-related firms might benefit if there is an increase in military spending, offering some upside to Musk’s plans.
As markets grapple with these possibilities, the broader landscape remains mixed. Equity indexes are hovering near all-time highs, and volatility remains subdued, suggesting that investors are cautiously waiting to see how these scenarios unfold.