While we wait for the final outcome of the election, we would stress the following observations with clients.

First, we reiterate our stance that investors should stay the course, regardless of the final outcome. While market volatility could persist until a clear winner is determined, we remain optimistic on the outlook for the economy and risk assets.

The economy has been improving ever since the severe lockdowns ended. This is evidenced by the third quarter’s record 33% growth surge after the historic collapse of the second quarter. Key economic indicators suggest the economy continues to heal, despite delays in the follow-on stimulus package. This rebound in economic activity is leading to a rebound in corporate profits that ultimately support stock prices.

Regardless of the election’s final outcome, we expect the follow-on stimulus package to ultimately get approved that will provide needed support for sectors of the economy hurt most by the pandemic. The American public, both Democrats and Republicans, favor a follow-on coronavirus stimulus package by a fairly wide margin.

With the election results we currently have, a large Biden victory won’t occur that would embolden Democrats to implement a comprehensive version of Biden’s policy platform. This suggests the follow-on stimulus package will probably be smaller than the $2.2 trillion package that was passed by the House of Representatives in October. However, the Republican-controlled Senate recently passed a $500 billion package, so sizeable stimulus should still be enacted in the coming months.

The lack of a large Democratic clean sweep also suggests Biden’s proposed tax increases, major climate change initiatives, and further health care reform would be harder to implement, even if Democrats gain control of the Senate. Trade tensions are likely to be lower under Biden, regardless of who controls the Senate.

A Trump victory would represent a continuation of his low tax and low regulation policies. Protectionist trade policies and the confrontational policy toward China would most likely continue. Trump already proposed a $1.8 trillion follow-on coronavirus stimulus package so a sizeable stimulus package seems likely if he remains in office.

Stay tuned for additional commentary as the final results become clear. In the meantime, we recommend investors stay the course with their long-term investment plan and avoid focusing on any near-term market uncertainties caused by this year’s presidential election.

Past performance is no guarantee of future performance and future returns are not guaranteed. There are risks associated with investing in stocks such as a loss of original capital or a decrease in the value of your investment.

This report is provided for informational and educational purposes only and shall in no event be construed as an offer to sell or a solicitation of an offer to buy any securities or a recommendation for any strategy or to buy, sell, or hold any product. The information described herein is taken from sources which we believe to be reliable, but the accuracy and completeness of such information is not guaranteed by us. The opinions expressed herein may be given only such weight as opinions warrant. This Firm, its officers, directors, employees, or members of their families may have positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis.

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