But under those circumstances, if there is a Trump victory: Expect more and higher tariffs, which could be trade-distorting and inflationary and hurt “the consumer discretionary, manufacturing and information technology sectors” , in the view of UBS, the financial services Company. Mr. Trump would likely be able to cut taxes and increase the budget deficit, boosting the economy but, again, inflation — which could lead to higher interest rates. There is likely to be less regulation, with sectors such as fossil fuel energy and financial services benefiting.
If Mr. Biden is re-elected but the Democrats do not control Congress, the status quo continues. Expect more regulation (although the Supreme Court on Friday limited the executive’s regulatory powers) and higher taxes on wealthy people and corporations than under Mr. Trump, along with executive orders that help “companies in industries, materials and utilities focused on renewables and energy efficiency,” according to UBS.
A landslide that would give control of both the White House and Congress to either party would be unexpected and could disrupt markets. Mr. Biden may be able to achieve legislative achievements that have been out of reach. The likelihood of tax increases on the wealthy and corporations is increasing. The odds of a positive outcome for clean energy companies are increasing, while banks and fossil fuel companies will have a harder time, or so the thinking goes on Wall Street.
A Trump landslide would be the most worrisome outcome from a purely financial perspective, because he could impose policies that could fundamentally change the way business is done and life is run in the United States. The New York Times covers the ongoing plans for a second Trump administration. I won’t go into details here.
Not a Trump landslide — not even a Democratic one — “has been priced into the markets,” Anthony Sagliben, chief market strategist for Ameriprise Financial, said in a briefing for reporters. “If we wake up on Nov. 6 and it looks like we have one-party control of Congress, I would expect volatility to increase.” But, he added, markets are likely to recover quickly. History tells us, Mr. Saglimbene said, that the market will refocus on interest rates and corporate earnings “once we get past the election cycle.”
