- Final result: Former Vice President Joe Biden defeated President Trump to become the 46th President of the United States. While Trump has not conceded yet, he became only the third President to fail to win re-election since World War II. In the end, the election was a referendum on Trump as a man rather than an indictment of his policies. A political realignment is underway, with GOP emerging as a working-class party and dominating the vote in rural areas, while the ‘Blue wall’ of the Midwestern states of Pennsylvania, Michigan and Wisconsin has become competitive for both parties.
- Key takeaways: This election and its outcome may lead to the repudiation of Trump, but not necessarily of ‘Trumpism’, as the election turned into a referendum on Trump as a person versus Biden as a person. Character was a factor. In addition, turnout hit its highest level since 1952 at 62%, with 148 million votes having been tallied. Finally, polls still appear to be off the mark, especially on Trump’s. It is possible that Trump’s appeal brings out low propensity voters. Declining response rates is probably the strongest argument why polls were off.
- Investment implications: Divided government will mean that the incoming Biden administration will be hamstrung to pass a large fiscal stimulus package, a big infrastructure bill, and higher taxes. This could help contain the budget deficit. However, concerns about the growth outlook for next year without further fiscal stimulus will be mitigated by very positive news from Pfizer and the high efficacy of its vaccine. Both developments are a positive backdrop for investor sentiment that will help fuel risky assets to rally, bond yields to trend higher and the dollar to continue its bear market.
Former Vice President Joe Biden defeated President Trump to become the 46th President of the United States. The election was called by multiple major US media outlets four days after Election Day on 3 November. While Trump has not conceded yet, he became only the third president to fail to win re-election since World War II. The race was remarkably stable despite potentially major moving events, such as Trump’s impeachment, the Covid-19 pandemic, the recession, the death of Supreme Court Justice Ruth Bader Ginsburg, the raucous first debate, and, finally, Trump’s own coronavirus diagnosis. In the end, the election tightened, but not enough for Trump to stay in power.
Trump tried to change the narrative from a referendum on his record to a binary choice between himself and Biden. Trump warned that Biden would bring socialised medicine and higher taxes. The exit polls suggested this may have helped sway last-minute undecided voters. However, in the end, the election was a referendum on Trump as a man rather than an indictment of his policies.