On November 5, Janus Henderson Investors hosted a panel discussion exploring the market implications of the 2020 U.S. election. Although the final vote was still unknown at the time, Democrat Joe Biden was projected to take the White House and Republicans were expected to remain in control of the Senate, even as polls prior to the election had suggested that a Democratic sweep, or “blue wave,” was likely.

With that backdrop in mind, our panel of investment professionals – Ashwin Alankar, Ph.D., Head of Global Asset Allocation; Jim Cielinski, CFA, Global Head of Fixed Income; and Matt Peron, Director of Research – joined moderator Bruce Koepfgen, Head of North America, to discuss what the result could mean for financial markets and investors.

Key Takeaways

  • Although the prospect of a split government suggests there will be less fiscal spending in the coming years, other policy risks have eased. And even without a “blue” sweep, we believe policy makers will pass some form of fiscal stimulus to help revive economic growth, particularly as the COVID-19 pandemic continues.
  • Since bottoming in March, U.S. equities have been climbing the proverbial “wall of worry” as the market prices in an eventual economic recovery. With the election over, investor confidence could start to return, helping boost stocks, while low-to-negative policy rates could benefit credit.
  • The election is just one of many factors to consider in today’s market. COVID-19 remains a dominant force, both in terms of upside potential (should a vaccine bring an end to the pandemic) and downside risk (should a resurgence of the virus lead to prolonged economic lockdowns). Secular stagnation, which we’ve seen in many parts of the developed world, is another consideration.