Andy Blocker. Head of US Government Affairs and Jennifer Flitton. Vice President of Federal Government Affairs
While it will take weeks or months to fully deconstruct and analyze the results of the 2020 US elections, we know enough to say, that the voters have yet again delivered a nuanced verdict.
President Donald J. Trump received more votes than any candidate in history… except for Joe Biden, the next president of the United States. Estimates project that more than 150 million Americans will have voted once all the ballots are counted — a 65%+ turnout percentage1 not seen since 1960. Within this historic turnout, Trump defied conventional wisdom and made double-digit gains with the Hispanic electorate while some 19 million “new voters” entered the fray and broke for Biden by a 2-1 margin.
The harsh judgment of the incumbent, however, did not carry down-ballot in any meaningful way. Hundreds of millions of dollars were spent to flip the GOP Senate and key state legislatures to Democratic hands but the result was a near-total failure. Not a single state legislature flipped control from red to blue, and while there were countless stories in the run- up to the election about the trends in Texas, not a single state seat went from Republican to Democratic either.
How did Biden cut against this state-level tide of GOP support? By recapturing the Midwest “Blue Wall” of Michigan, Wisconsin, and Pennsylvania, and making in-roads in recent GOP sources of strength in Arizona and Georgia. If the 2016 Electoral College victory for Trump (306 votes) was defined by 107,000 votes in those three “Blue Wall” states, the 2020 Electoral College victory for Biden (likely 306 votes) was defined by about 45,000 votes in Arizona, Georgia and Wisconsin.
As evidenced in yet another election, the United States electorate remains evenly divided despite predictions that demographic evolutions would kill the Republican Party. The election highlighted that voters can and will split tickets, that candidates matter and, as is often the case in a presidential election, that this was a referendum contest.
In this piece we try to outline the equity market reaction to the US election, why it is relevant to us and the 5 points as to why we believe that buying long duration assets is not the right answer.
Joe Biden was named the winner by the Associated Press. Among a backdrop of legal challenges, he is coming closer to being the 46th president. What might markets do if he’s inaugurated? We see five potential tailwinds that could be positive for markets.
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The opinions referenced above are those of the author as of 12 November 2020.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
