The Election, The Economy and The Markets

What Will A Biden Presidency Mean

“I am very optimistic.” David Metzner, managing partner at ACG Analytics, believes that a divided government with Joe Biden as President of the United States and Mitch McConnell as Senate Majority Leader will work out to the country’s benefit. Metzner believes that those gentlemen, as well as Senate appropriations committee chair Richard Shelby (R-Alabama) operate via negotiation – a skill he feels is lacking among newer and more partisan members of congress. 

Effect on the economy – Metzner expects the Biden administration to be a one-term presidency. As a result of that, he also expects that there will be a return to the White House acting as an interagency hub that will govern quickly.  He expects a centrist approach to policy, something he feels that McConnell will be amenable to. 

Some policies he anticipates will include a modest stimulus package in the range of $500-800 million for COVID relief and an infrastructure bill that is largely paid for in advance. 

Revenue raising bills will be on the table to tackle the deficit, but they will be hard to accomplish so long as the Republicans continue to be anti-tax, Metzner stated. 

Trades and Investments: The infrastructure bill that Metzner explains in detail could be funded by supplementing local governments and municipal bonds. These end up being very attractive investments for retirees and foreign investors. This will be an area to keep an eye on should infrastructure take center stage on the policy floor. 

How stocks have performed under 6 US government scenarios

The equity markets should remain strong based on historical data, but Metzner believes the FAANG stocks may take a few hits. 

“Remember, monopoly is not wrong at law, it is an abuse of monopoly that is wrong,” Metzner stated.

Amazon has benefited from supply chain advantages.  Metzner does not believe they will be hampered too much by regulations, but there are some concerns that they are favoring their products over mom & pops. He believes that will get smoothed out. 

Google and Facebook could be under real scrutiny. Google is facing a very serious anti-trust lawsuit from the DOJ and Facebook will likely face regulatory action because it will be seen as a purveyor of speech & content. “There will be increased scrutiny of these issues of free speech, of content, but there will also be increased scrutiny of market dominance,” Metzner explained.

Takeaways: The balance of the senate still remains up in the air until the January 5, 2021 Georgia runoffs. This situation will continue to evolve until the COVID pandemic is resolved – something Metzner feels a national mask mandate would help alleviate until a vaccine is mass produced. A return to centrist government, international trade, friendly foreign policy and programs designed to stimulate the economy should have the “U.S. shifting back and becoming more of a stabilizing role in the world, Metzner believes.”

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