For starters, markets don’t necessarily fall out of bed when Democrats get in the White House. In fact, the Dow Jones Index typically does better under a Democrat. LPL Research has it that, while Republican President Calvin Coolidge presided over the strongest bull run, in the 1920s, the next three best reins for markets were all Democrat; Clinton, Roosevelt and Obama.
Secondly, Trump’s Covid doesn’t necessarily play badly for him in the polls. If he recovers quickly, he will point to himself as living proof that not over-reacting to the pandemic and prioritising the economy was the right policy.
Third, while a President Biden would raise taxes, he’d also up spending on infrastructure – something Trump promised but didn’t really deliver – and push through the $2.5-3 trillion covid stimulus package that’s been stuck in a Republican-Democrat standoff for the past two months.
That, along with the Federal Reserve’s super-easy monetary policy, would keep yields on US Treasuries low, weaken the dollar and boost exporters. Sounds pretty good for share prices, no?
