Wall Street New Week – Joe Biden Win? Disputed Election? Stock Prices After Presidential Elections

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Investors are currently girding their portfolios as it prepares for the market as we head into the US presidential election in November, as we get into an election season with the Democratic national convention next week.

While elections might have appeared larger in the investor’s behavior this year, their impact on the share market has not been as dire, with the COVID-19 pandemic and the unprecedented fiscal stimulus from the US lawmakers taking the front-seat.

However, this might change in the next few weeks. Some investors are making bets or readying cash positions on the rising volatility as the wait for different outcomes, including the possibility that the contest between Joe Biden, the Democratic presidential contender, and president Trump might produce results that are not instantly certain or would be disputed as Biden Presidential Campaign Raises $48 million Within 48 Hours After Picking Harris As VP.

Villere’s company has raised their cash levels to 20% of assets as the hedge against the high volatility in the stock market some investors state that has become highly valued. On the other hand, the S&P 500 index has previously rallied over 50% from its fresh lows and trades at higher prices to earnings increasing in the past few weeks.

There are some investors who believe that the performance of the market in the next few months might point to the candidates that are most likely to win in the upcoming November elections.

The incumbent president seems likely to win the election mostly when the S&P 500 surges in the 3 consecutive months before the presidential election. This is according to the TD securities data analyzed from the 1930s.

This is not good news for president trump. Although the index has climbed 3% this month, August usually kick-starts what is largely known as the three weakest months of a year for equities where the historic returns stand at around 0%.

On the other hand, there are no incumbents who have won a second term when there is a recession.

As of now, the Democratic nominee leads president trump by a whopping 8 points, according to the data released after Biden chose Kamala Harris to be his running mate.

A win for Biden might possibly threaten most of the policies that have been championed by Trump administration. Technically speaking, the Wall Street favors Biden due to the few regulations and low corporate taxes.

The proposed corporate tax rate increment to about 28% might cut 5.5% from the 2021 S&P 500 earnings, reduce capital spending by $50 billion and possibly result in a 100$ billion drop in stock repurchases.

On the other hand, a Biden led government will most likely take a different approach towards the China and Europe trade tariffs, further helping the emerging and international market stocks significantly outperform the U.S equities in 2021.

However, one of Biden’s main polices regarding a $2 trillion boost in infrastructure spending might also weigh heavily on the vulnerable US Dollar.

It’s also important to note that Trump’s re-election might allay more concerns about higher taxes, but raise fears of the Sino-US tensions.

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