Nicolas Janvier, Head of US Equities, EMEA
“Traditionally, the morning after a general election in the US, we have a relatively clear picture of who the winners are going to be. This is not the case this morning as we don’t yet have full results to determine who the President and Vice-Presidents elects are. While this isn’t ideal, it’s not unprecedented and a potential spike in market volatility would not come as a surprise to us whilst the votes are being counted. However, investors should take comfort in the fact that the US has constitutional backstops that address inconclusive results. It is important to note that there is an established process in place and that we will have a President on Inauguration Day on 20 January 2021. History also tells us that changes in presidential administrations rarely lead to material fundamental changes to the US economy. Our focus therefore remains on the underlying fundamentals of the companies we invest in.”
Toby Nangle, Global Head of Asset Allocation
“With votes still being counted the US Presidential election is still up in the air, where it may remain for some days. Overconfidence around what this election means for markets over the medium-term carries serious risk. But vote tallies in key Senate races are consistent with no overall Democrat control even in the event that Biden wins the Presidency. As such the abolition of the filibuster, feared by tech investors wary of the prospect of regulatory hardening looks less likely. The prospect of a very substantial fiscal package that would boost nominal GDP – raising demand for goods and services, dampening deflationary fears and pushing bond yields higher – looks lower with a split Congress. As such, initial market reactions that have seen bond yields fall and quality growth equities retaining their leadership look reasonable.”
