2020 US Presidential Elections

MARKETS: HOW THE ELECTIONS WILL IMPACT STOCKS AND THE US DOLLAR

The candidates this year, Republican President Donald Trump and Joe Biden the presumptive Democratic nominee whose official nomination is not until August, are probably the two most unusual competitors since the early days of the Republic two centuries ago.

Both candidates have high approval rating from their respective parties, President Trump at 85% from Republicans and Biden at 74% from Democrats in surveys from Gallup.

Markets are likely to remain agnostic on the election until the Fall.  The reason is quite simple. Polls this far from November 3 have little predictive value. Short of a change in candidates what happens between now and Labor Day is the preliminary for the main event.

Historically, Republican candidates and party platforms have been viewed as more favorable to business and markets and better stewards of the economy. That has been changing in recent years with a majority of Wall Street money going to Ms. Clinton in 2016.

The attitude of the markets to this election and its highly unusual economic, political and cultural landscape and the enormous degree of polarization in the electorate may make a strict good or bad for business analysis next to impossible.

About US RATES

The absolute and sustained decline in Treasury yields and commercial interest rates overall is solely due to the Fed’s revived quantitative easing bond purchases initiated in March. Fed assets have soared $3 trillion in the past three months, almost as much as the $3.5 trillion gain in the six years of financial crisis purchases and the bank has extended its buying to various commercial issues.

Presidential election years are the pinnacle of political entertainment in the United States. There is more public interest, more press coverage, more voting and this year more polarization than in any election in a generation.

There are also more than the usual number of moving parts. Aside from normal political rhetoric, since the election of Donald Trump more angry and divisive than ever, there have been large protests over racism in many American cities. If that wasn't enough, the pandemic continues to course through society fraying nerves and unemployment is at its highest level since the Depression.

The candidates this year, Republican President Donald Trump and Joe Biden the presumptive Democratic nominee whose official nomination is not until August, are probably the two most unusual competitors since the early days of the Republic two centuries ago.

Without entering the political arena ourselves, we will look at the state of the parties and their relation to the candidates, the view from the financial markets and venture some guesses about the campaign in the summer before its unofficial start on Labor Day.