05 Nov EQUITIES SURGED ON AN APPARENT BIDEN VICTORY
Equities surged on an apparent Biden victory and a divided government that lowers the probability of a radical re write of the Constitution and the repeal of some of President Trump’s pro-business tax policies. Equities were also inspired by Senate Majority Leader McConnell’s comment that a stimulus package will be passed by year end.
As expected, legal action is beginning. The Trump Campaign is suing both Michigan and Pennsylvania to halt the vote count to ensure “voter integrity.” Moreover, the President is demanding a recount in Wisconsin given the race is within 1 percentage point.
As indicated legal action was widely expected. The WSJ opined on election eve “May the best lawyer win” as both sides massively lawyered up.
At the time of this writing, the President can still win if he wins PA, North Carolina, Georgia and Nevada. Biden would win if he wins Nevada. And then there is Arizona which some believe is still in play.
I have been following politics for many years and this is the first time that I am aware Nevada is the potential lynch pin of a national election. It is always, Ohio, PA and Florida.
I think all will agree the outcome of the 2020 election was an incredible surprise. There was no “Blue Wave.” The Republicans gained seats in the House as opposed to the projected 12-15 loss. The Republicans maintained control of the Senate versus the consensus view of change in power.
Finally, the Presidential election was considerably closer than expected as Biden was projected to win by the greatest margin in over 36 years.
Barring any successful legal challenge or Trump’s very narrow pathway for victory, President Biden will become the forty sixth President by margin considerably lower than projected.
Winning is easy. Now comes the hard part…governing.
Radically changing topics, today is a Fed meeting. No change is expected in policy or statement.
Last night the foreign markets were up. London was up 0.26%, Paris up 1.02% and Frankfurt up 1.60%. China was 1.30%, Japan up 1.73% and Hang Sang up 3.25%.
The Dow should open moderately higher, perhaps on relief that there was not a “Blue Wave” and rising optimism about a significant stimulus package. The 10-year is up 4/32 to yield 0.75%.