How the 2020 election will influence market trends
"AGF Investments Chief U.S. Policy Strategist Greg Valliere discusses how this years election will influence market trends and what investors should expect as November approaches. "
Video Transcript
- Joining us now is AGF Investments Chief US Strategist Greg Valliere. Greg, nice to see you.
GREG VALLIERE: [INAUDIBLE]
- So this soaring stock market's got people wondering, Greg. Is it because people think Donald Trump has the situation under control and we're going to be heading back a V-shape recovery, or is it the case that people think Biden is going to win and provide more stimulus? Or is it maybe both?
GREG VALLIERE: Or if I could give you a third, I think there's a widespread feeling in the markets that, should the markets falter, you'll have Jerome Powell save them. I think Jerome Powell is determined to keep the economy afloat and the markets afloat. I think that's a huge factor.
- Hey, Greg. I read your daily newsletter. You've been on our Electionomics podcast, and you've talked about this. You frequently remind people, don't count Donald Trump out, even though he's behind by about eight points to Joe Biden nationally at this point. So how does Trump win this thing? What would it take? Would it take Joe Biden self-destructing? Some kind of remarkable recovery in the economy? What do you think could do it?
GREG VALLIERE: Well, first of all, it's worth noting that, four years ago, Trump was behind by six or seven points. I think he's right now behind by maybe 7 and 1/2 points. But it's still doable, especially if you look at the battleground states. Pennsylvania, for example, where the numbers have tightened.
So how could he win? I think, yeah, first of all, Biden is good for a gaffe every couple of weeks. I think that's why his team has kept him quiet. I think that would be a factor. You know, I think that Trump, for all of his many flaws, is a really, really impressive campaigner. In the last couple of weeks against Hillary Clinton, Trump did four or five big events a day. He showed tremendous energy. And he may again. He may catch the wave. He may catch the momentum. But we can't delude ourselves, Trump is clearly the underdog.
- So Greg, it's Kristin here. I'm wondering, to that point specifically on the voters themselves, one, can Biden win back states like Ohio, where working class voters essentially have left the Democratic Party, even though the labor movement does back Democrats? They've gone over to President Trump. And do you think that Donald Trump can do anything, essentially, to win back that suburban, college-educated, white female voter? Because they are overwhelmingly starting to say that they are also backing Democrats.
GREG VALLIERE: You're absolutely right. I think the key is college-educated women. And Trump's numbers with college-educated women are just terrible. Could he win Ohio? Sure. I think he probably will win Ohio. I happen to be in a minority. I think the most important state is Florida, not Pennsylvania or Michigan or Wisconsin or Arizona. If Trump loses Florida, we can all go to bed by midnight. I think that, without Florida Trump, cannot win re-election. And the polls show him ahead by five or six points. It's interesting that, in the two states that have the highest number of retirees, Florida and Arizona, Trump is not doing well. And I think that may be indicative of his performance on the virus. I think a lot of senior citizens feel he's been too dismissive of the virus.
- President Trump has really struggled to nail down his pitch to voters for a second term. I know his campaign released a big broad list of policy ideas that he'd like to pursue, but not a lot of details. Do you expect that we'll hear more of these details in the coming weeks, and really in the convention over the next few days?
GREG VALLIERE: No. I don't think they'll get too explicit on the issues. I think they're pretty hazy on the issues. I do think, though, they have two agenda issues they're going to bash Joe Biden over. Number one is Biden's reliance on an enormous amount of tax increases, whether it's individual, corporate, capital gains, estate tax, on and on and on. There's going to be a huge amount of tax hikes proposed by Biden. And that could come back to haunt him.
And the other thing is urban violence, which the Democrats did not talk about last week. And you know, whether it's Portland or shootings in Chicago, it's a serious issue. And I think that this will be one where the Republicans will seek a big advantage.
- Greg, on those points, the market has not wavered at all. I mean, stocks have only gone up this summer, as Biden has taken a pretty solid lead in this election. I mean, there are some things about Biden that might be good for business, possibly a big infrastructure program, and then more stable relations with China and so forth. Can we conclude at this point that investors and the stock market is fine with the prospect of a Biden presidency?
GREG VALLIERE: I think the markets have made their peace with this. What they have not made their peace with is the Senate going to the Democrats. If the Democrats controlled all three-- presidency, White House, and Senate and House-- that's maybe not a good story for the markets. The markets tend to like divided government. And I think that, if the Senate falls-- it's a close call, but the Senate could fall. If the Democrats control everything, I think that is not in the markets.
- Greg Valliere, thank you so much for joining us.
GREG VALLIERE: My pleasure.
