We guess Shakespeare would be interested in a stage play
However, the drama with the Trump presidency still continues. It is traditional for the incumbent president to invite the election winner to the White House to discuss a range of issues, including the transition. That has not happened as yet. Even if that doesn’t happen, one should assume, Biden and his team should be able to merge into all affairs relating to the White House fairly quickly since Biden was vice-president for 8 years only 4 years back. So if required Biden can still work from home for a longer time. What is more important for the markets is how the election impacts the balance of power in the Senate. As of Saturday, the chamber appears to be deadlocked at 48-48 based on ABC News projections. Four races are still undecided, including two in Georgia that are projected to go to a runoff on Jan 05.
I am sure the Democrats will throw everything at winning those seats. At the moment it is unclear as yet if Biden will be buoyed by a Democratically controlled Senate and House.
This uncertainty can linger and prevail for several more months. The concern and fear one should have been if the Democrats win the Senate and the House will they turn very leftist and socialist in which case we could see a major turnaround in the stock markets or will the party go for a massive stimulus and government spending package for a transformation in clean energy. My hunch is for the latter as Biden surely will not want to kill the stock markets. Under a split congress, it is very unlikely you will see an increase in corporate taxes and capital gains taxes or any massive stimulus for clean energy.
As it stands Biden is a centrist and pragmatist. The best outcome you could have had for all the mess that the world has been through.
Equities
The outcome of the US presidential elections did not put any dent into the animal spirits of the market participants. The consensus is that the status quo will continue and that has given a bid to the markets and a springboard to rise from the lows of Oct 30. This can even carry to new all-time highs into 2021 before a top can be considered.
Bonds
In the last couple of days, bonds were all over the place. It rallied to the critical resistance levels of 175^28. Yields dropped to 1.479 % and have been climbing up since. Any further move down in yields should be considered as a counter-trend move. Higher rates are on its way.
Euro
Euro very strongly held our advertised level of 1.1600 and has moved up strongly. Pullbacks can be expected but it should continue to trend higher.
Gold
Finally, gold has pushed above its critical level of 1934. The rally from 1849 is not perfect but the odds have now shifted for a rise above the previous highs.
Author: ©Abraham George, CEO, Founder of AllSeasonsPTL Capital Management Ltd.
