Our research department at LPL Financial wrote two excellent papers regarding the upcoming election, which we wanted to share with you.

This research indicates the election remains a “coin toss” and forecasts the relative market/economic impact of either administration.

The following is a quick summary for your perusal. The full report is linked in this post.

In the event of a Biden win:

  • Early data favors Biden
  • Primary market risk may likely come from potential tax increases (especially on businesses)
  • Regarding personal taxes, a likely increase to capital gains
  • Possible increased regulation (in the Financial Services, Energy, and Healthcare sectors)
  • Initiatives in governance (e.g., infrastructure, COVID-19 related fiscal stimulus, a Biden presidency may lower the risk of financial destabilization due to a politicized Federal Reserve)
  • Support of state and local governments may be a higher priority

In the event of a Trump win:

  • A continuation of the lowered tax rates for corporations, small businesses, and individual taxpayers (and perhaps further cuts down the line)
  • Further deregulation (especially in the Financial Services and Energy sectors)
  • A perpetuation of tough trade policies in regards to China (with a reduction of reliance on China trade as a goal)
    • This toughening stance on trade will also most likely spill over to trade with the European Union
  • A divided Congress would continue (a split Congress has historically been better for stocks, which tend to like checks and balances to ensure one party does not have too much sway)

Historically there has been no clear-cut pattern of either the markets or economy performing better based on the presidential party.

Sincerely,  Alvin Anton & Investment Committee