U.S. Election 2020: Straightaways and Detours
Thoughts on the Market
Morgan Stanley
4.8 • 1.4K Ratings
🗓️ 22 October 2020
⏱️ 9 minutes
🧾️ Download transcript
Summary
What is the road ahead for global markets between now and inauguration day? The answer may fall into two categories: straightaways and detours. Part one of a special two-part episode.
Transcript
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| 0:00.0 | Welcome to Part 1 of a special two-part election 2020 thoughts in the market. |
| 0:07.0 | I'm Andrew Sheets, Chief Cross Asset Strategy for Morgan Stanley. |
| 0:11.0 | And I'm Michael Zesus, head of public policy research and municipal strategy. |
| 0:14.7 | Today we'll be talking about the upcoming US election and predictions of overall government |
| 0:19.4 | outcomes and what this means for countries and markets. |
| 0:22.4 | It's Thursday, October 22nd at 3 PM in London. |
| 0:25.8 | And 10 a.m. in New York. So Michael, as you've noted before on this podcast, you believe that the overall government |
| 0:32.3 | election outcome is what will matter more for investors |
| 0:35.4 | than any one candidate's success. Just to catch listeners up walk us through what that thinking is. |
| 0:41.6 | It really boils down to the difference between a presidential campaign's |
| 0:47.3 | promises and what can actually get legislated. |
| 0:50.4 | And that's a function of whether or not the party that takes control of the White House also has control of the House of Representatives and the Senate. |
| 0:59.0 | And in short, the more control they have, the more of their campaign promises they can get done. |
| 1:04.7 | In this particular election, the difference between, for example, the Democrats taking control |
| 1:09.9 | of the White House but not the Senate, and the Democrats taking control of the White House but not the Senate and the Democrats seeking control the White House and the Senate |
| 1:15.3 | is pretty substantial in terms of the fiscal policy outlook. |
| 1:19.7 | We can't just focus on the presidential race. |
| 1:22.1 | Another thing you've noted is that the first move that markets have in response to this year's election outcome might not be the lasting move. |
| 1:30.0 | What do you mean by that? |
| 1:32.0 | Well, I think it's normal for investors to focus on the presidential race and sometimes conflate what has been promised by a candidate with what can actually be done. And those two things aren't the same and they can have very different impacts on the economy. |
| 1:47.5 | So for example in 2016 what investors told us through survey data was that a Trump election was |
| 1:56.0 | something they were concerned would be very risk negative. At the same time |
... |
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