US Election Thoughts
Updated: Nov 18, 2020
The US Election take place this week and that represents a major event risk.
Betting markets have consistently favoured Biden however polling did produce incorrect results for both the 2016 US election and Brexit vote. Polling businesses say they have improved their processes.
I have not special insights however here are my thoughts.
Trump we know will favour business friendly practices, which is great for short term horizons however not always a good long term foundation for sustainable markets. A Trump administration would likely do nothing different to stop the spread of the coronavirus’s epic first wave in that country.
Biden will be looking into more rigorous regulation of corporate behaviour as well as energy transition away from fossil fuels. In short a Biden victory represents more change to market valuations than Trump, relative to pre-election.
A clear outcome for either contestant will be welcome. A close election will result in a period of paralysis to follow and both sides have made clear there is little love and the gloves are off. Emotions are evident from the two Presidential debates.
With multiple asset classes trading at or near all time highs and markets gyrating around more than usual risk is certainly elevated. However with negative real returns on cash remaining in place for a prolonged period, and bond yields unattractive for our absolute return objective, its to opportunities in equity markets where our attention needs to remain focused.
As always contact me if you would like additional information.