US guns stocks fell and prison stocks are soaring after Donald Trump won the presidential election, and the shares of building material and equipment companies also had a great day out overnight Wednesday.
Corrections Corp of America was the biggest percentage gainer on Wall Street, with shares surging 49%. Shares of Geo Group, which has corrections and other facilities in North America and abroad, jumped 21%. This adds to week-to-date gains of 45% and 22.5% respectively for the two companies. They bounced not because the Obama administration in August announced plans to phase out some private prison use (which could be reversed in a Trump administration), but because of his election promise to deport illegal immigrants, especially millions of Mexicans and other Latinos. The thinking is that they will need holding jails while the process happens and who best to build them (and suck off the government teat)? — the private jail companies.
And the synergy (for investors, perhaps not anyone else) is Trump’s Mexican wall. Naturally punters went off searching for the winners from this piece of rubbish (the Mexican government repeated overnight, no wall and no payment, setting itself up for a direct clash with the US). So there was demand for favourite Trump infrastructure stocks like Martin Marietta, which rose, then fell; Vulcan Materials ended up around 10%, as did shares in Granite Construction, while shares in Terex and Manitowoc Cranes were up 13% and 14% (both sell and lease equipment). In London, shares in building materials supplier CRH PLC rose 6%, as the US market makes up 51% of its sales, while shares in UK equipment-rental company Ashtead Group closed up a tasty 12%. Shares in the biggest equipment group, Caterpillar, jumped nearly 8% as it was seen as perhaps the best placed of these companies.
But there are always losers as well as winners, and it saddens me to report that the gun lobby and its key funders are now seen as the biggest losers now that Obama has gone and Clinton beaten. Shares of gun maker Sturm, Ruger & Co. lost 14% overnight, following a week-to-date decline of 14% (28% down this week so far). Smith & Wesson Holding Corporation shares were down 16%, adding on to a week-to-date decline of 6% (down 22%). That makes a change from the strong gains made around the Obama election wins in 2008 and 2012, and the gains made when their were mass shootings in Florida, Sandy Hook near New York, in Oregon, San Bernadino in California and several other atrocities. But watch for some big new arms contracts from Trump’s administration for rifles, assault weapons and handguns to help ease the pain of transition for the gun mob and the lobby.
By comparison with these gains, the S&P 500 rose 1.1% overnight, and is up 3.5% so far this week (most of that gain was due to the mistaken belief that Clinton would win).