Market Volatility Updates

 

As if navigating market volatility during a pandemic wasn’t enough, we now have to contend with the multiple ways different election results could impact the market. We’ve gathered the insight from some of our best minds to help you navigate the risks and opportunities of the different potential outcomes.

Market Insights: Planning for Potential 2020 Presidential Election Results

2020 has been an unprecedented year on many levels—and the election season is no different. With many states voting completely by mail, we may not know the results of the Presidential, Congressional, or Senate races until well after election day. While this in itself can lead to volatility, so can the multiple potential results.

At WisdomTree, we believe the best idea may be to be prepared. So, we’ve gathered the insight from our best minds to help you navigate the risks and opportunities of the different potential outcomes.

 

Read the Market Insight

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Podcast: Market Wisdom with Professor Siegel

Listen to the timely podcast with Professor Jeremy Siegel, WisdomTree’s Senior Investment Strategy Advisor and Professor of Finance at The Wharton School of the University of Pennsylvania, who shares his perspective on the market on a weekly basis. 

WisdomTree Office Hours

Advisors can now join our thought leaders as they discuss current markets and actionable investment solutions. This small-setting format allows for advisors to ask questions and enter into a dialogue, leveraging our thought leadership to navigate the market uncertainty. The schedule is updated weekly.

Actionable Ideas for Potential 2020 Election Outcomes



Outcome 1: Joe Biden wins, and the Democrats sweep the House and the Senate

Potential Bearish Market Reaction & Investment Ideas: : We would anticipate more deficit spending, and, if the administration increases regulations and corporate taxes, we think infrastructure and defensive sectors could perform well. We believe higher minimum wages could benefit consumer companies and would expect more predictable trade negotiations, especially with China. We would expect short-term interest rates would stay low and for Treasuries and the U.S. dollar to face headwinds after an initial flight to safety.

Potential Bullish Market Reaction & Investment Ideas: : We could see equity markets continuing to treat all positive political developments with risk-on enthusiasm and believe the cyclicals and value stocks that were most affected by the shutdown could begin to close the gap with their growth counterparts. We would expect global growth and trade to recover as relations improve. And we could see higher Treasury yields and tightening credit spreads, although we expect the path of the U.S. dollar would be mixed.

Outcome 2: Joe Biden wins, the Democrats retain the House, but the GOP retains the Senate

Potential Market Reaction & Investment Ideas: : From a tax perspective, this would be a positive scenario for equity markets, with technology leading at the expense of more cyclical sectors like small cap value. We would expect Fed policy to remain on autopilot, for short-term rates to remain anchored, and for intermediate- to longer-dated yields to depend on the execution of the policy framework.

Outcome 3: Donald Trump wins, the GOP retains the Senate, and the Democrats retain the House

Potential Market Reaction & Investment Ideas: : We would expect the economic reopening to support a cyclical reversion where small-caps benefit from pent-up demand and with cyclicals generally outperforming defensive sectors due to strong global growth. We would expect Fed policy to remain on autopilot, for short-term rates to remain anchored, and for intermediate- to longer-dated yields to depend on the execution of the policy framework.

Outcome 4: Donald Trump wins, and the GOP sweeps the House and the Senate

Potential Market Reaction & Investment Ideas: : We would expect the economic reopening to support a cyclical reversion where small-caps benefit from pent-up demand and with cyclicals generally outperforming defensive sectors due to strong global growth. We would expect Financials and Energy to perform well, for China hawks to pressure emerging markets relative to the U.S., and for the Fed outlook to be revisited. We could also see credit outperforming on a relative basis, the yield curve steepening as inflation expectations rise, and that the future of the dollar would depend on a number of things.

Thought Leadership


Nasdaq Trade Talks ETFs in 2020 and Outlook for 2021
Anita Rausch, Head of Capital Markets at WisdomTree, joins Jill Malandrino, Global Markets Reporter at Nasdaq, on Trade Talks, to discuss lessons learned with ETFs in 2020 and to provide an outlook for 2021.

Commentaries from Our Thought Leaders

For more daily insights from our thought leaders, from macro commentary to helpful tips on trading ETFs in times of high volatility, visit our blog.
More blog posts on the 2020 presidential election are available here.

Basis Points Podcast with Kevin Flanagan