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U.S. Election Implications and What-if Scenarios

The 2020 U.S. Presidential Election All-Access Pass

Biden is leading in the polls. Could the Democrats orchestrate a 'blue sweep' — gaining control of not only the Presidency, but the House and the Senate as well? The chances of the polls being just as misleading as they were in 2016 is slim, but there is another troubling possibility that could lead to a tremendous amount of uncertainty.  What if there is no decisive victory, and the task of vote-counting drags on for months? 

From probabilistic determinations of election scenarios to descriptions of 9-cell matrices of possible outcomes, the below papers delve into all of the potential what-ifs for the upcoming U.S. electoral process. They include discussions of areas of political divergence like taxes, healthcare, and trade policy, as well as commentary on the common ground shared by both blue and red political agendas. Historically, election years have been known for atypical amounts of volatility, but in 2020, volatility may be the only thing that we're collectively accustomed to experiencing. 

US Presidential Election

2020 U.S. Presidential Election: Let the games begin! (MFS, Sep 2020)

Taxes, healthcare, and trade are the areas where the two U.S. Presidential candidates potentially diverge the most in terms of policy. Biden will certainly attempt to increase corporate taxes if sufficient momentum is carried through to the congressional elections as well. MFS looks at these and other electoral implications, advising investors to maintain a disciplined approach during times of potential volatility.

Politics, Policy, and the Pandemic (Wellington Management, Oct 2020)

Wellington Management presents their multi-asset outlook for the next 6 to 12 months, including commentary on the U.S. election, progress towards a vaccine for COVID-19, and other topics.

Podcast: The President Has COVID-19 — Now what? (Brookings, Oct 2020)

This 11-minute podcast from The Brookings Institution discusses President Trump's recent COVID-19 diagnosis, what it means for his campaign, and what happens when Presidential health concerns arise.

Webinar 15 Oct: 2020 U.S. Election Implications (PGIM Fixed Income)

PGIM Fixed Income brings together five expert economists, strategists, and portfolio managers for a roundtable discussion of investment implications stemming from potential U.S. election outcomes. This webinar takes place on October 15, 2020.

Settling the Election (Northern Trust AM, Oct 2020)

Okay, but what happens if nobody wins? With an abundance of absentee ballots this year, the probability of an uncertain outcome is higher than many polls may suggest. Northern Trust fleshes out this what-if scenario with an in-depth look at the timeline for what would happen next.

US Election Outlook and Implications (Franklin Templeton, Oct 2020)

For compliance reasons, this paper is only accessible in the EMEA region

This Franklin Templeton article covers election implications for U.S. equity markets, but it is also inlaid with videos on topics with bipartisan support — future infrastructure spending and the reshoring of manufacturing activity.

US Presidential Election: The economic and financial impact (Amundi, Sep 2020)

For compliance reasons, this paper is NOT accessible in the United States

Amundi's poll shows Biden having a 7.3% advantage over Trump as of mid-September, but the authors believe the race could be much closer. They also cover some interesting tertiary topics, such as ESG themes over the next four years.

It’s Fiscal Policy on the Ballot (UBS AM, Oct 2020)

This analysis from UBS AM outlines the different odds they ascribe to various outcome scenarios for the US election as well as their expected initial market implications.

2020 US Elections: Impact on Real Estate (DWS Group, Oct 2020)

DWS see two differentiated outcomes: a Democratic Sweep and everything else. In this guide they present the impact that the US election might have on real estate.

Election uncertainty looks increasingly certain (Capital Group, Oct 2020)

For compliance reasons, this paper is only accessible in the UK & Europe

Capital Group highlights the high level of uncertainty associated with the U.S Presidential election, particularly given the significant number of postal ballots being cast. There remains a significant probability that the election result may result in a repeat of the 2000 recounts and legal challenge, with uncertainty potentially dogging the market for some time.

US Election: The debate, the diagnosis, and jobs (Invesco, Oct 2020)

For compliance reasons, this paper is only accessible in certain geographies

Invesco examines three events in this paper — the recent US presidential debate, the implications of President Trump's announcement that he and his wife contracted COVID-19, and the release of September payrolls data.

Our Election Framework (Federated Hermes blog, Oct 2020)

A 9-cell matrix is required to think about all resulting possibilities from the U.S. Presidential election, plus the control of the U.S. Senate and House of Representatives. Federated Hermes briefly discusses this matrix and their thoughts on the likely outcomes.

U.S. Stock Performance During Presidential Elections (Janus Henderson, Sep 2020)

For compliance reasons, this paper is only accessible in the United States and Canada

Janus Henderson hones in on equity performance during election years, looking at the months leading up to the election, as well as the two months afterwards. They also examine market volatility, which has been atypically high this year already.

The US Election: The final stretch (LGIM blog, Oct 2020)

For compliance reasons, this paper is NOT accessible in the United States and Canada

This recent article from LGIM puts the probability of a Blue Sweep (Democrats winning the Presidency plus both houses of congress) at 50%, five times the probability of a Red Sweep.

U.S. Elections: Everything will be obvious, once it is known (DWS, Sep 2020)

As of mid-September, DWS strategists have the odds of a Biden win at around 60%. The authors also describe the probabilities of various congressional outcomes alongside their reasoning.

How Elections Move Markets in 5 Charts (Capital Group blog, Sep 2020)

For compliance reasons, this paper is only accessible in certain geographies

How do elections influence investor behavior and market reactions? Capital Group draws insights from 85 years of financial market data, focusing in on election years.

US Election Stress Test: Biden’s tax plan and the FAANGs (Qontigo, Oct 2020)

A recent WSJ article discussed tech stocks' vulnerability to tax increases. In light of this, Qontigo conducts a stress test looking at the implications of a Biden victory for FAANG stocks and other equity sectors.

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