Eq: Total Market

(Washington)

There are just under 100 days left until the election and there is a lot on the line for markets. The economic approaches of the Trump administration and the potential incoming Democrats could not be more different, which means there are huge implications for stocks. Here is the good news—over the last 40 years, markets have historically risen leading up to the election, and volatility has usually decreased. Now the big possible twist is the COVID pandemic, a major factor that has not occurred during an election cycle. The most comparable election cycle seems to be 1968, when the US was going through similar levels of social unrest. The S&P 500 gained more than 3% in the run up to that election.


FINSUM: As we see it, the two big risks are COVID (and its economic consequences), and a leftward move by Biden. The Fed will certainly soften the blow of the former, while the latter remains.

(Washington)

Republicans are supposed to debut their new stimulus package today—after a long wait that neither side was happy about—but the details are still unclear. Some prominent party members hinted at details of the proposal on CNN yesterday. So far, it looks like enhanced unemployment benefits will be continued, but at a lower amount, an eviction moratorium would be extended, and direct $1,200 payments may continue for a subset of Americans. Republicans say they want to negotiate a stop-gap deal while a larger package is hashed out. House speaker Pelosi wants the full package negotiated now.


FINSUM: Given the length of time it may take to hash out a complete new deal, millions of Americans would probably be happy if a basic short-term package was agreed ASAP.

(New York)

Bank of America’s head of global research, in conjunction with the head of their private bank, has just given a major midyear update to clients. The message: we are at the start of a bull market. While they think the recovery might be a little bumpy, in the longer term, they believe there is a great economy on the other side and long-term investors would do well to get into the market on down days in the immediate future.”


FINSUM: Inside these broader predictions was another interesting one- so if stocks are going to rise, which sectors gain the most? BOA’s answer was that despite being overbought, tech still seems likely to see the most gains because the pandemic has accelerated areas that benefit them the most, including automation, cloud-computing, and live streaming.

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