The U.S. 2020 Election
The big news for the week was the announcement that President Trump has COVID-19. He was required to have a 72-hour stay at Walter Reed Hospital. He may generate a slight bump in popularity from his well-wishing to others who have COVID.
Regarding the stimulus bill, President Trump has sent mixed messages. We do not think the bill will be passed prior to the election, because the focus is on the Supreme Court of the United States nomination for the Republican-controlled senate. J.P. Morgan Wealth Management, as well as Gatewood Wealth Solutions, believe a contested election is the baseline scenario. We discussed JPM cross reference for political outcomes and are in agreement with the following:
While Trump has long been the preferred market candidate given his stance on taxes and deregulation, strategists increasingly downplayed the risks of a Biden presidency. They highlighted the potential for:
Infrastructure Stimulus
Higher Wages
Dampened Trade Tensions
A more cohesive response to the coronavirus pandemic and less onerous changes to corporate taxes than have been previewed
I also do not believe the current polls reflect the actual race. I do not believe Biden has a substantial lead. Many polls are oversampling democrats; this does not seem to help when a populist candidate or movement is on the ballot. Biden’s leads are similar to Clinton at four weeks out from election day last election. However, this is not saying President Trump will win; just that the odds are not as bleak.
COVID-19 Update, GDP, & Money Supply
Coronavirus cases are climbing, but the growth rate is slowing. GDP numbers are positive, but unemployment is still sluggish. Home ownership continues to be a bright spot; however, supply of homes is low, and the demand is high. Affordability is positive, with rising wages over the last few years and LOW interest rates. Lastly, credit standards are still tight.
Money supply is continuing to trend downward, but it will likely level off at robust growth. We just are coming down from a 60% annualized growth rate. You should expect markets to be choppy going into the election with just four more weeks until Election Day.
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Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All investing involves risk including the possible loss of principal. No strategy assures success or protects against loss. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.
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