US markets pricing in ‘balancing act’ in Biden victory
The likelihood of stability from a potential President Biden is balancing out his plans for higher taxes, according to Natixis Investment Managers.
The latest polls were forecasting a win for Democratic candidate Joe Biden at 52% compared to 48% for current US president Donald Trump.
Natixis IM head of global thematics and macro research, Esty Dwek, said while Biden had campaigned with an agenda of higher taxes, this would be countered by the predictability of a Biden presidency compared to Trump.
“The markets are under-pricing a Biden win with his policy of high taxes. Taxes will go up if Biden wins but there would be less uncertainty and that means a trade-off might balance things out and that’s why markets haven’t reacted so much,” Dwek said.
“It is a balancing act between the two things, there will be volatility and a correction after the election but not a massive sell-off.”
She warned, however, that investors should not “underestimate” Trump or his ability to get re-elected.
Meanwhile, Michael Power, global strategist at Ninety One, added a Biden win would also cause a rift within Trump’s Republican party.
“If Trump loses then it would split the Republican party and it would have a very hard time over the next few years. There would also be a wide-ranging investigation of Trump’s taxes and his links to Russia,” he said.
“I think Biden will win but it will be a very close call and Trump would likely cry foul. I forecast the Democrats will win control of the Senate and retain control of the House of Representatives so all three arms of government would be ruled by Democrats and the Supreme Court would become more liberal.”
AUTHOR
Laura Dew
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
