Tonight, Obama is delivering the State of the Union. It is expected that the themes in his speech will include the economy and guns and same-sex marriage (and hopefully other stuff too because last time I checked, my daily life included more than just those three topics). As you sit through the standing ovations and watch for the hilarity of audience reactions, we’ll be paying attention to the impact on sin stocks.
So what are some of the potential impacts on sin stocks?
1. No impact to alcohol sin stocks or tobacco sin stocks because this government wants to spend! It is expected that Obama is going to use the State of the Union to lay out the need for more spending rather than the need for cuts. So if we are going to take that to its logical conclusion, it means a need for more taxes. And tax revenues need to come from somewhere, including income tax (a popular topic, especially the tax burden of the 1%) as well as corporations. So we at Sin Stocks Report don’t expect any changes to the highly-taxed alcohol and tobacco products.
2. Ignored: Sex sin stocks. The State of Union focuses on the things that are highest on people’s minds and right now. They are thinking about the economy (jobs, financial security, retirement, healthcare) and they are thinking about gun and gun violence (either anti-gun or pro-gun) and about same-sex marriage. They aren’t thinking about whether their personal values are at risk because of risque media.
3. Potential changes to conflict sin stocks and crime sin stocks. The State of the Union will likely focus on the impact of guns in society. That could have two effects: Among the anti-gun crowd, it could bolster sentiment against gun manufacturers. Among the pro-gun crowd, it could bolster sentiment for gun manufacturers. The impact could be felt in the stock prices of those companies. However, in our opinion, the anti-gun crowd won’t have as negative of an effect on gun manufacturer’s stock prices as the pro-gun crowd will have a positive effect on stock prices. (For example: The promise of anti-gun legislation probably won’t drive gun manufacturers out of business but could actually push stock prices higher as pro-gun people go out and buy more guns). Additionally, addressing guns and gun-related crime might include language about becoming “tough on crime”, which can possibly mean a bump (now or in the future) on crime sin stock companies that provide prison services.
4. Potential improvement to gambling sin stocks. The State of the Union is going to address the economy. We see positive things for gambling sin stocks as a result. If the economic outlook is positive (which Obama will undoubtedly spin), people will feel freer to gamble. However, if the economic outlooks is negative (which people might decipher from the tone of the State of the Union), it will drive people to gamble more.