In the last post, I linked to the wrong video at Real Vision. The one I linked to was about Europe’s shutdowns and a worsening Covid-19 pandemic. I wanted to link to Monday October 26th discussion. Here is the link.
I also found a comment on the video from me replying to viewer on October 27th that encapsulates what I was trying to say in the video:
Kevin, I happen to think a Trump win and a Republican Senate are two outcomes that are not getting enough airtime in terms of the dispersion of potential outcomes that result. That’s why I went over them today. The ‘Blue Wave’ thesis is everywhere. So, what I’m saying is ‘hang on, there are other reasonable-probability outcomes too that we should run through’.
In a Trump win scenario, big tech is vulnerable, as are media stocks, and China-dependent stocks for the reasons I outlined. Though I didn’t say it here, it could be bullish for shares more generally if the Senate is Republican.
In a Republican Senate/Joe Biden outcome, that’s bullish for Treasuries and (potentially) bearish for equities because it means less stimulus. Less stimulus means less medium-term growth – which may or may not dent the S&P500 depending on how people allocate to growth vs value.
Divided government in a polarized society is one that is unable to conduct policy. Irrespective of who is president, that’s negative if and when the economy needs policy support.