Election Mania In Times Of Covid-19

It is only perfect that a year as tumultuous as 2020 be concluded with one of the most volatile elections the free world has ever seen. Neck and neck are Democratic challenger Joe Biden and incumbent Republican Donald J. Trump; this affair has solicited the most voter turnout the US has ever seen, with over 150 million Americans showing up to cast their ballot in person, or, controversially, send them in via mail-in voting due to COVID19 complications. The overall result of this is a country in limbo as an election stretches on with votes continuing to be counted and even more being cast in some cases. Switching the paradigm, financial markets are very much so affected by the political sphere and the magnitude of these afflictions is further exacerbated in today’s environment by the extreme polarization of the political left and the right. While the old adage is that markets crave certainty, the interesting fact regarding this week’s political limbo due to the extraneously ongoing election is that markets have appreciated.

This is due to the emergence of a winner without a major hiccup. More importantly, the so-called Blue Wave, expected prior to the elections, did not materialize. With the Blue Wave scenario, in addition to the current control of Congress, Democrats will be taking the presidency and the senate.  That would have led to a major shift in fiscal policy with a large stimulus package, a rollback of the tax cuts that Trump initiated and increased scrutiny and antitrust proceedings to the mega tech sector. It is also synonymous of a weaker USD and gains in commodities including Gold. The actual outcome, or apparent as of this writing, is the Democrats taking the presidency while the senate remains under the Republicans control, or the so-called gridlock. That means that Trump-era tax cuts may not be rolled back, at least not immediately, and fiscal stimulus, though likely, will probably be scaled back from what it would have been under a Blue Wave as the Senate will have the ability to oppose congress proposals. 

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