As I write this late the day after the presidential election day, the world remains in deep flux. The election results are still undecided, and with both sides preparing recounts and lawsuits, it may not be for some time, even if official winners are finally called.
The Trump campaign says it will sue to stop vote counts in battleground states Michigan and Pennsylvania. Postal data show poor mail-in ballot delivery in key areas, twisting the paths for Joe Biden and Donald Trump to win decisively and claim 270 electoral votes.
So far, the markets have cheered the news, with global stocks gaining on the US election data, and tech shares surging in our markets.
This is widely attributed to the strong prospect of a split Congress, with it looking like the Dems will hold the House, and the GOP the Senate. While this portends more gridlock, it also way cuts the odds of big tax hikes and regulations damping the economy and cost of living any time soon.
Personally, I also think the relative calm of election week was a factor. While lots of dander is up and we’ve seen scattered protests and riots, it could have been lots worse.
The split Congress also lessons chances for the massive fiscal stimulus the economy desperately needs. The Fed is holding rates steady, but signals continued fear. It can’t do it alone, and needs big government spending to juice an economy still very much on life support. But with a Republican Senate, chances of this are dim regardless of who is crowned President to be in the White House.
All this on top of worsening COVID news, with US daily Coronavirus cases topping 100,000 for the first time, and new lockdowns emerging in and increasingly-infected Europe. But many of you may not know that this has really become a tale of two COVID worlds, with much of Asia – and including Australia and New Zealand – pretty much virus free, while the West is pummeled with no end in sight for the long term. Who would have thought China would quickly become a low risk country? But it has.
For us, I fear much more pain is in store, as the cold months loom and Americans tire of COVID and drop their guard even more.
And still, the stock market parties like it’s 1999.
That’s it for this Week in Wealth, more soon, Jeff