CIO Weekly: Markets enter orbit of US elections and earnings
Importantly, Biden is also leading in all swing states and those which he commands a sizeable lead include Pennsylvania, Michigan, Wisconsin, and Florida. In the senate race, data from PredictIt show that the Democrats is also amassing a sizeable lead over the Republicans. There is indeed a rising possibility of a Democrats clean sweep in the upcoming elections.
S&P 500 reacting positively to a Democrats clean sweep. Contrary to conventional thinking, markets are increasingly warming up to the idea that a Democrats clean sweep may turn out to be positive for risk assets given that: (a) A Democrats clean sweep reduces the likelihood of a contested election, (b) Democrats’ proposal in fiscal spending (at c.USD2.2t) is far larger than the package put forward by the Republicans (at c.USD1.6t), and (c) Near-term concerns of a Biden tax hike are unfounded because should he win the election, the initial focus will be on the pandemic.
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