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What Biden Means for the Stock Market

What Biden Means for the Stock Market

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The S&P 500 is back near a record high, rising in four of the past five sessions. Analysts say that a “blue wave” election, in which Democrats win the presidency and control of Congress, could be good for the stock market. They didn’t always have that view.

First, they fretted about taxes. When Joe Biden emerged as the likely Democratic presidential nominee, Wall Street focused on the leftward lean of his platform — including a $700 billion infrastructure plan, $775 billion child-care plan and $2 trillion climate plan — and, especially, his plan to raise taxes.

• The potential rollback of Trump tax breaks was “top of mind of equity market investors,” Morgan Stanley analysts noted in June. They warned that “deficit spending and redistribution” under a Democrat sweep might dampen corporate confidence, investment and employment.

Then, stimulus talks failed — and coronavirus cases rose. When Congress passed the CARES Act in March, D.C. insiders dubbed it “triage,” assuming there would soon be a second bill. But talks on a second stimulus package have stalled, with Democrats pushing for an omnibus plan and Republicans favoring stand-alone measures to limit deficit spending. As the economic recovery began to sputter and coronavirus cases rose across the country, analysts began to discuss the possibility of Democratic control in a different way.

• “All else equal, such a blue wave would likely prompt us to upgrade our forecasts,” Goldman Sachs analysts wrote this month, pointing to the likelihood of a giant stimulus package shortly after the inauguration in January and longer-term spending increases after that. The effect of such measures would “at least match” the drag from tax increases, they wrote.

And President Trump refused

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Why the market narrative on a November ‘blue wave’ flipped in just 2 weeks and what it means for stocks, according to UBS

Why the market narrative on a November ‘blue wave’ flipped in just 2 weeks and what it means for stocks, according to UBS



Joe Biden wearing a suit and tie: Joe Biden, the Democratic presidential nominee. Getty


© Getty
Joe Biden, the Democratic presidential nominee. Getty

  • The market narrative on what a “blue wave” in November could mean for stocks has flipped over the past two weeks, UBS said in a note on Monday.
  • The prevailing market narrative over the past few months that election victories for Democrats would hurt stocks because of the potential for higher taxes is now dead, according to UBS.
  • Instead, expect stocks to move higher if there’s a blue wave, and don’t be surprised if investors are disappointed if it doesn’t happen, UBS said.
  • Visit Business Insider’s homepage for more stories.

Throughout 2020, the consensus view has been that a Joe Biden victory and a “blue wave” in November would be bad for the stock market because of the potential for higher corporate taxes and more regulation.

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But that market narrative has been flipped on its head in the past two weeks, UBS said in a note on Monday.

Now investors expect that a Biden victory and Democratic sweep in Congress could be a catalyst for a reflation trade, in which cyclical and value stocks trade higher and the US dollar weakens, further helping US stock prices.

The impetus for a change of heart among investors is threefold, according to UBS:

  1. “The inability to pass a major fiscal package prior to the election means that it’s increasingly likely to be the Democrats’ top priority after a Blue Wave outcome.”
  2. Higher taxes will be a 2022 problem for investors, not a 2021 problem.
  3. “Biden’s widening lead in the polls and prediction markets, and along with it the likelihood of a Blue Wave, is reducing election uncertainty,” UBS said, adding that a delayed or contested election would be more unsettling to investors than a Democratic sweep of the White House and Congress.
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Here’s why the market narrative on a November blue wave flipped in just 2 weeks, and what it now means for stocks, according to UBS

Here’s why the market narrative on a November blue wave flipped in just 2 weeks, and what it now means for stocks, according to UBS

joe biden
  • The market narrative on what a potential November blue wave could mean for stocks has flipped over the past two weeks, UBS said in a note on Monday.
  • The prevailing market narrative over the past few months that a blue wave election outcome would hurt stocks due to higher taxes is now dead, according to UBS.
  • Instead, expect stocks to move higher if there is a blue wave this November, and don’t be surprised for the potential of investors being disappointed if a blue wave doesn’t happen, UBS said.
  • Visit Business Insider’s homepage for more stories.

Throughout 2020, the consensus view has been that a Joe Biden victory, and a potential “blue wave” in November, would be bad for the stock market because of the potential for higher corporate taxes and more regulation.

But that market narrative has been flipped on its head in the past two weeks, UBS said in a note on Monday.

Now, investors expect a Biden victory and Democratic sweep of Congress this November to serve as a the catalyst for a reflation trade, in which cyclical and value stocks trade higher, and the US dollar weakens, further helping US stock prices.

The impetus for a change of heart among investors regarding a blue wave and its impact on stocks is three-fold, according to UBS:

1. “The inability to pass a major fiscal package prior to the election means that it’s increasingly likely to be the Democrats’ top priority after a Blue Wave outcome,” UBS said.

2. Higher taxes will be a 2022 problem for investors, not a 2021 problem, according to UBS.

3. “Biden’s widening lead in the polls and prediction markets, and along with it the likelihood of a Blue Wave, is reducing election uncertainty,” UBS said, adding that a delayed or

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A fifth of Brits don’t know what a recession means

A fifth of Brits don’t know what a recession means

Millions of Brits may lack the financial knowledge to make the most of their money. Photo: Dominic Lipinski/PA Wire/PA
Millions of Brits may lack the financial knowledge to make the most of their money. Photo: Dominic Lipinski/PA Wire/PA

One in five Brits don’t understand what the word “recession” means, research suggests.

More than a fifth (22%) of UK adults told Raisin.co.uk Our research shows that more than a fifth (22%) of British adults are bewildered by financial terminology, putting them at a disadvantage in understanding and growing their money.

What’s more, two in five (42%) are concerned they’re not making the most of their money because they lack vital financial knowledge.

This rises to two in three (57%) of 23 to 34-year-olds – 56% of whom already have debt.

The term “effective annual rate” (EAR) – the return on a savings account, accounting for compounding interest – causes the most confusion, with 77% of people admitting they don’t know what it is.

READ MORE: UK economy faces ‘perfect storm’ as winter looms

However, words like “inflation” and “recession”, which appear frequently in the media – especially currently, during the COVID-19 pandemic – also confuse a fifth of people, with 19% and 20%, respectively admitting to not understanding what they mean.

This could potentially be leaving millions of Brits too ill-informed to sufficiently prepare for the financial impact of the coronavirus crisis, the study’s author noted.

Additionally, just 22% of adults feel they can turn to friends or family who work in the industry to help them understand the financial jargon, with only 15% speaking to their parents.

“The last 12 months have been incredibly testing for UK consumers,” said Kevin Mountford, co-founder of Raisin.co.uk.

“With multiple rate drops from the Bank of England, to wide-spread speculation of a recession and negative interest rates, there is a lot for consumers to process.

“The research clearly shows that people are too

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What California’s new equity rule means for economic reopening

What California’s new equity rule means for economic reopening

OAKLAND, Calif. — California has launched the nation’s first mandate on reopening that requires local officials to control the coronavirus in their most impoverished communities before easing business restrictions across their entire county.



a group of people sitting at a table in front of a building: Patrons eat at table set up on a sidewalk in Burbank, Calif.


© AP Photo/Marcio Jose Sanchez
Patrons eat at table set up on a sidewalk in Burbank, Calif.

The approach is aimed at tackling a persistent inequity in California, where low-income people of color have disproportionately struggled to avoid contracting the disease.

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“If you believe in growth and you don’t believe in inclusion, then we’re going to leave a lot of people behind,” Gov. Gavin Newsom said this week. “And one of the things we value as a state is inclusion, and we believe that we’re all better off when we’re all better off.”

The Covid-19 pandemic has laid stark the health disparities that have long existed, with poor, Black, Latino, Pacific Islander and Native communities being hardest hit by the pandemic. Latinos, for example, make up about 40 percent of the state’s population, but account for more than 60 percent of coronavirus cases and half the deaths.

California’s “equity metric” attempts to tackle that disparity by requiring that the 35 largest counties invest more in testing and ensure that positive rates of infection in the most disadvantaged neighborhoods come close to meeting the county’s overall positivity rate. The rule ensures that restaurants in Beverly Hills can’t resume indoor dining unless the most impoverished census tracts also show low rates of infection.

The change adds a third metric to the state’s newest reopening structure, which Newsom unveiled in late August and billed as an improvement to the previous approach that has been blamed for the state’s summer infection surge. Before now, the new structure has relied only on a county’s overall positivity mark and the rate

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