Economic Commentary – Nov 2020

December 1st, 2020, by Chris Davis

Change of Heart Pt. 2

After the uncertainty of October, November saw confidence return to markets following the US presidential election and the announcement of a number of viable coronavirus vaccines.

Relief and a new direction

Whilst Joe Biden’s victory of the US Presidential race to be President elect was positive news for some (although Donald Trump still refuses to concede defeat), US technology and healthcare investors were relieved by the fact that the Senate was not won by the Democrats. A ‘Blue Wave’, feared by investors in technology and healthcare due to the promise of increased taxes and regulation that would be imposed on the sectors. Despite this being a key part of the Biden-Harris campaign for now this is unlikely to happen with Republicans in control of the lower house.

There is concern from those that bought into the progressive policy programme of the Biden-Harris campaign that they will face an uphill political struggle like Obama did, to enact their policies. After passing the initial $3 trillion on government spending in the Spring, the White House and Congress have since failed to reach agreement on further stimulus in response to the pandemic crisis. If the Democrats had control of the Senate, markets would expect a large fiscal stimulus and huge infrastructure spend. This has caused others to believe that the US Federal Reserve (Fed) will be more ‘simulative’ than it might have been otherwise in the coming years.

Chris Davis
Chief Investment Officer

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