Companies prepare for Tuesday: Election discussions increase on corporate calls.

In recent cycles, executives at America's largest companies have been more open about discussing the presidential election with investors.

The highest number of companies in the broad index mentioned the word "election" during the period from Sept. 15 to Oct. 31, according to CNBC screens going back to 2004. The U.S. presidential election is on Tuesday, Nov. 5.

As Americans head to the polls for a tight race between Kamala Harris and Donald Trump, white-collar leaders are weighing the potential policy impacts on their businesses while expressing concern about the general uncertainty brought on by the political season.

Richard Tobin, CEO of a specialty manufacturer, informed analysts on the company's earnings call in late October that there is caution due to election uncertainty and other factors.

John Butters, a senior earnings analyst at FactSet, was the first to notice the increase in companies discussing elections in recent weeks. Notably, his data revealed that only a small percentage of S&P 500 executives mentioned Harris or Trump by name, instead focusing on the race more generally.

'Prudent' clients

Numerous firms reported that the unpredictability of the presidential race was causing uncertainty among their customers and clients.

After reporting a rise in emergency response sales due to Hurricanes Helene and Milton, CEO Harry Lawton stated that the company's customers should remain "prudent" like in previous election years.

While Andrew Watterson, the operations chief, anticipates a decrease in air travel around Election Day, Michael Bayley, the CEO, stated that there has been no significant long-term impact on booking trends from presidential elections. However, the cruise line may experience some volatility during the week leading up to the election.

The Federal Reserve's monetary policy meeting next week is being closely monitored by market participants and business leaders, in addition to Election Day. Tool maker CEO Donald Allan has stated that both the election and interest rates are reasons to anticipate "choppy markets" into the first half of 2025.

The CME Group's FedWatch tool indicates that there is a 96% chance of a decrease in borrowing cost at the November meeting, following the central bank's first rate cut since 2020 in September.

Allan from Stanley Black & Decker highlighted Trump's plan to impose a 20% tax on imports, with an additional 60% tax on imports from China, which would likely put America in a new tariff regime.

William Grogan, CFO of a water infrastructure company, stated that the election is contributing to a "slight delay" in the industrial market for large-scale projects. CEO Jon Vander Ark of a waste disposal company expressed his optimism about the future, stating that he sees "a bit of paralysis" in an election year, but believes that things will improve as we approach the end of 2024 and the start of 2025.

Watching the economy

Eric Ashleman, CEO of a company that produces components for various products such as airbags and DNA testing equipment, stated that the race hasn't positively impacted the current economic climate.

In October 2020, nonfarm payrolls grew by the smallest number of jobs since late 2020 due to hurricanes and the Boeing strike. As a result, background screening volumes also saw softness, with executives considering the potential impact on their businesses.

Mark Begor, CEO of Equifax, stated that companies seem to be more cautious with their hiring decisions as the election approaches.

This year, some "election" mentions were related to unrelated events, such as enrollment periods for health care. However, other companies, including software companies and credit card giants, have not experienced any business impacts due to the election.

"Stephen Squeri, CEO of American Express, stated to analysts last month that the company has been in existence for a long time. He emphasized that although the company did not have cards 174 years ago, it has been present for numerous elections and changes in the House, Senate, and other configurations."

Mark Parrell, CEO of the real estate investment trust, stated that state and local government is more crucial to the business than the outcome of the presidential election.

Moving forward

The 2024 election has garnered a high number of mentions among leaders in the largest firms within corporate America's S&P 500, with one mention of the election on calls during that timeframe for every five companies. This is more than triple the number of references during the same period in 2008.

According to CEO Paul Romanowski, the homebuilder is trying to increase demand by providing mortgage buydowns and constructing smaller houses, as buyers are staying on the sidelines due to the anticipation of lower mortgage rates in 2025 and the stress caused by the election.

Another member of D.R. Horton's executive team discussed the election in a more direct manner.

""I believe the end of the election will improve buyer sentiment and enable individuals to make progress with their personal decisions," said Michael Murray, the company's chief operating officer, during the earnings call."