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JP Morgan Chase: Investors Should Prepare for a Trump Win

By September 16, 2020 No Comments

Analysts believe there could be a shift of five to 10 points in polls from Democrats to Republicans if the perception of protests turns from peaceful to violent.

According to JPMorgan Chase & Co, investors should position for the rising odds of President Donald Trump winning re-election.

Betting odds that earlier had Trump well behind challenger Joe Biden are now nearly even — largely due to the impact on public opinion of violence around protests, as well as potential bias in polls.

“Certainly a lot can happen in the next ~60 days to change the odds, but we currently believe that momentum in favor of Trump will continue, while most investors are still positioned for a Biden win,” strategist Marko Kolanovic wrote Monday, according to Newsmax. “Implications could be significant for the performance of factors, sectors, COVID-19 winners/losers, as well as ESG.”

Biden’s narrowing advantage in polls evokes memories of the 2016 election when such tallies seemed to favor Hillary Clinton strongly. While Clinton won the popular vote by several million, the Electoral College, a state-by-state count that determines the election outcome, ended decisively in Trump’s favor.

Kolanovic, who has been accurate on calls including the stock rally after Trump’s election and the rebound from COVID-19-fueled lows earlier this year, said important drivers of the election in the coming weeks include developments on the Covid-19 pandemic, which looks like it might subside as the vote nears.

While the strategist didn’t spell out the implications of a Trump win in Monday’s note, back in June JPMorgan suggested a Biden victory would lead to a weaker dollar. The tail risk of a large swing to progressive policies could lead to U.S. asset underperformance that would be dollar-negative, particularly against reserve currencies, strategists at the firm said.

Later in July, Kolanovic and others said Wall Street was too negative about a Biden win, primarily citing concerns about tax increases that may not affect earnings as much as some expect. They also noted that companies in areas like alternative energy and infrastructure might benefit from a Democrat victory, while those in areas like private prisons and defense might underperform.

Kolanovic’s note on Monday said the outcome of any debates, and the Democrats’ stance on protests, are also key. The latter risks turning off voters generally if seen as too permissive, but also could alienate progressives if it’s not seen as sympathetic enough, according to the note.

What’s interesting is the declining impact of the economy on the elections. We’re in a recession with unemployment rates well above what they were in the 2008 economic and yet the likelihood of that shifting the favor for one candidate over another is slim to none. While in the past the failing economy would have put Biden in the lead, there are a few key elements working in Trump’s favor. He’s an incumbent, his base is very loyal to him and the Electoral College favors him.

What’s clear to see regardless of the outcome of the elections is that we’re in an economic downfall that will likely take years to recover from, still with the uncertainty of where we will actually be years from now. We certainly didn’t anticipate dealing with another crash and devastation after 2008, yet here we are again facing greater detriment to our everyday lives. However, it doesn’t have to be all doom and gloom if you know what to do to prepare for the future.

Looking back at long-term, safe-haven investments of the last several decades, it’s clear to see that precious metals have made significant gains. Gold alone has climbed up 250% since the 2008 crash and continues to rise. In the past 6 months alone, gold has increased by 30% and broke an all-time record, surpassing $2000 per ounce. Still expected to rise, it is now predicted to pass $2500 in the next 12 months. Silver has also doubled its value in the past 6 months since the Coronavirus lockdown, signaling that precious metals see a significant rise in value and trust in times of crisis.

Regardless of the outcome of the November elections and the direction of the economy, if you invest wisely and safeguard your retirement savings, then you can have peace of mind knowing you’ve set yourself up successfully for the future – for you and your family – and that’s really what matters most.  Contact Allegiance Gold today to find out more about how you can maximize your retirement savings.

 

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