MacroResearchBoard

Trump Versus Biden – October 19, 2020

The U.S. elections on November 3 could bring significant changes to fiscal policy and the economy in the next four years, with important implications for capital markets. The outlooks for federal spending, taxes, regulation, health care, the environment, and trade policy hinge on who wins the presidency and has control of Congress.

As examined in a just-published report, there are potentially huge implications of the election outcome on the financial markets. Specifically:

• Biden’s proposals bode better for economic growth on a 1-2 year horizon given weak current demand, but embody greater risk thereafter.
• Biden’s fiscal proposals imply higher risks for equities, bond and the U.S. dollar compared with Trump’s.
• The campaign proposals of both Biden and Trump would significantly increase the federal budget deficit and debt in the years ahead, from already projected high levels, potentially to the detriment of the U.S. dollar.
• This, in turn, may finally prod equity investors to begin to venture beyond the U.S. bourse.