With Joe Biden the clear favourite, it’s tempting to call the race before it’s even run. But while Donald Trump is down, he’s not out.
The race has been run. Nearly 100 million votes have already been cast, and former vice-president Mr Biden is the clear favourite to win. Should that come to pass, the rest of the world will have to adapt to the new President’s radically different agenda. Mr Biden is running on the promise of a transformation in how America does business – not just with countries like China, but with its own citizens. A blue sweep is expected to usher in a green agenda.
Mr Biden is promising a rapid transition to renewables – something that could see Australia facing significant pressure to do the same, despite Boris Johnson’s failed intervention on the matter – and a higher corporate tax rate for American companies. The relationship with China will likely become more belligerent, not less, and Australian businesses face the prospect of being sucked into the melee as our government attempts to honour its strategic obligations to the US while maintaining ties with our largest trading partner.
But President Trump has delivered shock victories before. And while his handling of COVID-19 is a live issue for the electorate, Mr Trump’s last-minute campaign blitz (and his rapid recovery from the disease that has killed almost a quarter of a million Americans) have only reinforced the strongman image that engendered such enthusiasm among the demographics that carried him to victory in 2016 – demographics that have shown little sign of turning away from him four years later.
So Biden is relying on the unprecedented voter turnout to put him in the White House – and at this point, so are markets. The Biden victory is more or less priced in. Images of boarded-up stores in America’s major cities promise chaos on the streets and in markets should this prediction not come to pass. But as American Century’s Richard Weiss noted, there’s no sense losing your mind about the election outcome.
“Your investment portfolio should be based on longer term expectations of your particular income needs and desire for growth, et cetera, not determined by who's going to be in the White House,” Mr Weiss noted.
“You’re also betting on the fact that they will enact successfully the policies that they proposed they would, and that the market hasn’t already discounted that fact into market prices. And so it’s effectively a three-part bet, what’s known as a parlay in the jargon of gambling, and they’re notoriously difficult to get right. So again, we would suggest not using your investment portfolio as a way of gambling on politics.”
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