What's going on?
Former vice president Joe Biden is the odds-on favorite to win the US presidency, so we’ve looked at where investors might bet their bottom dollar if he does.
What does this mean?
Both prediction and financial markets are pointing to a “blue wave” in which Democrats take control of the presidency, the House of Representatives, and the Senate (tweet this). And with both the law-making and executive branches of the government under their control, it’ll be far easier to pass new rules and regulations.
One of the priorities will be another hefty coronavirus support package, as well as an estimated $2.2 trillion worth of infrastructure and climate-related spending. Democrats are also likely to come down hard on Big Tech – with a view to both limit its influence on elections (among other things) – as well as raise much-needed taxes, which they might then use to start repaying the money borrowed to battle the pandemic.
Why should I care?
For markets: Stocking up on value.
More spending from Democrats would send more money into the US economy, which would hopefully boost its growth prospects and, in turn, increase inflation forecasts. And even if the prices of goods and services don’t actually pick up, the expectation they will could lead the US central bank to increase interest rates. That possibility’s historically encouraged investors to sell off things like government bonds and buy into cheap-looking “value” stocks.
The bigger picture: Nothing’s certain but death, taxes, and wind.
One industry likely to do well from a Democrat victory is renewables: fresh tax subsidies and the prospect of offshore wind projects could give related companies a boost. And even if there is a Republican victory, our analyst reckons they could still do well. With record numbers of mail-in votes, the final election result probably won’t be known for days if not weeks after Tuesday, so having an eye on investments that might do well in either case could be handy.