I cannot find precise words to describe this year. It is almost like one of those never-ending series. I may not be very old, but I believe this year would be at the top of the rank when describing one of the most historical years ever in the future. Could you have ever imagined that a United States sitting president would refuse to concede after losing an election? (Your guess is just as good as mine. Only in 2020!!) What a weekend it was! There is this feeling of hope an underdog’s story gives you. It makes you believe that there is nothing you cannot achieve if you put your mind to it and never give up. That’s the feeling I got when former Vice President Joe Biden, now President-elect, and Senator Kamala Harris, now Vice President-elect, made history by winning the United States Presidential election with over 74.7 million votes, more than anyone who has run for both offices in the United States of America.
Joe Biden will become the 46th president and the oldest man (78 years old) ever sworn into office, securing 273 votes thus far from the Electoral College after Pennsylvania was called in his favour. The race was however much closer than many Democrats, Republicans and pollsters had expected. The result also provided a history-making moment for Senator Kamala Harris of California, who became the first woman and first woman of color, to serve in one of the country’s two highest offices. I guess it is true what they say then, America is a place where dreams come true.
While most of the country was in a celebratory mood last weekend, President Trump had refused to concede losing the election. I will not say I’m surprised because I saw this coming as he took to Twitter, tweeting “WON THE ELECTION” and “71,000,000 Legal Votes. The most EVER for a sitting President!” Trump’s campaign team expects to continue its effort to dispute the election results with the next round of lawsuits this week. But so far, they have been unable to point to any credible evidence of voter fraud that would alter the outcome of the race. It will be interesting to see how things turn out. Will Trump stepdown like Olenna Tyrell when Jaime Lannister’s army sacks Highgarden, offering Olenna a peaceful end? Or will it be a “Dracarys” moment before Trump steps down? (Scenes from Game of Thrones)
Before we address the question of what a Joe Biden Presidency will mean for markets, I will leave you with this excerpt from President-elect Joe Biden Speech.
“As my grandpop — our grandpop, he said when I walked out of his home when I was a kid up in Scranton, he said ‘Joey, keep the faith.’ And our grandmother when she was alive, she yelled, ‘No, Joey, spread it.'”
What a Joe Biden Presidency Will Mean for Markets?
The global financial markets have spent most of this year clawing its way back from a gut-wrenching sell off, triggered by the COVID-19 outbreak and economy-shutdown policies to slow the pandemic. The question now is, will a Biden victory sustain the recovery path? Let us begin with his proposed policy around energy since our revenue projection and FX depends on our oil prices.
Renewable energy has been one of Biden’s rhetoric during his presidential campaign. Biden vowed to bring U.S. emissions down to net-zero by 2050, including bringing emissions from the power industry to net-zero by 2035 – a goal that will be tricky to accomplish without a Democratic majority in Congress. We will most likely see the U.S. rejoin the Paris Climate Agreement that Trump pulled away from, saying it could hurt the U.S. economy and Biden banning issuance of new drilling permits on federal lands and waters as promised, to fight global climate change. These will eventually reduce supply from the U.S, providing support for crude oil in a Biden era.
On global negotiations, we hope to see more stability. It remains unclear what combination of co-operation, competition, and confrontation Biden will use to engage with China and the rest of the world. Biden has shown an interest in multilateral diplomacy like previous Democratic administrations, and we expect this to play out in his first tenure.
Vaccine in play…
While markets opened higher on the back of the Biden election win, the U.S. pharmaceuticals’ giant, Pfizer in Kalamazoo, Michigan, announcement of its vaccine being “90 percent effective” against Covid-19 infections further strengthened the global rally. The FTSE closed 276 points or 4.7% up at 6,186, on Monday while the S&P 500 opened in record territory in reaction to the vaccine developments. Remember Zoom that surged 100% during the early stages of the pandemic? It was down by 18% at the open of U.S. equities market on Monday as a majority of the stocks which have hit record values this year, supporting people as they work and shop from home, witnessed selloffs.
Where is the money?
The news of the vaccine coupled with a larger stimulus package could sustain a risk-on sentiment in the coming weeks that will lead to yield hunting in SSA papers.