The upcoming US presidential election has the nation on edge, with polls suggesting a close contest between Vice President Kamala Harris and former President Donald J. Trump. However, a recent poll conducted in Iowa may have shaken things up, potentially impacting the race and, in turn, the global geopolitical landscape.
According to Ann Selzer, a renowned pollster from the Des Moines Register, Harris holds a slight lead over Trump, 47% to 44%, among likely voters. The significance of this finding lies in the fact that Trump held a four-point advantage in the same poll back in September. Furthermore, he led President Joe Biden by a significant 18 points before Biden withdrew from the race.
While this poll suggests a shift in momentum, it’s worth noting that another Iowa poll conducted by Emerson College Polling/RealClearDefense shows Trump leading Harris by a 10-point margin. The Trump campaign has dismissed the Des Moines Register/Mediacom survey as an “outlier poll.” However, Selzer has a reputation for accurate predictions, including correctly forecasting Trump’s wins in Iowa in both 2016 and 2020.
If Selzer’s prediction proves accurate once again, investors might want to turn their attention to the geopolitical arena. Harris has consistently echoed the Biden administration’s unwavering support for Ukraine in its fight against Russia’s invasion. She has also been vocal in criticizing Trump’s alleged “friendship” with Russian President Vladimir Putin. Should Harris win the election, it’s highly likely that the US would intensify efforts to provide lethal aid to Ukraine, potentially bolstering the defense industry in the process.
For investors keen on speculating on a Democratic electoral victory, the Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN) ETF could be an option. This highly leveraged ETF aims to generate daily returns equivalent to 300% of the Dow Jones U.S. Select Aerospace & Defense Index’s performance. DFEN’s portfolio includes leading defense contractors like RTX Corp (RTX) and Lockheed Martin Corp (LMT). However, it also includes companies involved in civilian aerospace infrastructure, such as General Electric Co (GE) – operating under GE Aerospace – and Boeing Co (BA).
It’s important to remember that leveraged ETFs carry a significant amount of risk. Investors should exercise caution and avoid holding positions for extended periods, as the daily compounding of volatility can lead to substantial value erosion over time.
The DFEN chart reveals a bullish trend, with the fund gaining 34% year-to-date, despite encountering some volatility. Following the release of the Iowa poll, the defense-focused ETF experienced a notable surge. Interestingly, DFEN showed signs of life after President Joe Biden dropped out of the race, potentially highlighting Harris’s potential to attract investor interest.
However, investors should keep an eye on the broadening wedge formation that has emerged since July, as it could indicate bearish implications. The upcoming weeks will be crucial for observing market reactions to the election and its potential impact on the defense industry.
