The outcome of the US election resembles scenario II of our latest TAD
see further : https://c a p.dk/us elections stimulus or stalemate/ ).
• Given the vice president’s casting vote, a 50 50 outcome for the Senate following the January Georgia elections would in principle suffice for the Dems to be able to implement a major fiscal stimulus program . But it’s a tall order . Failing this , GOP opposition is likely to rule it out
• We look at the risks to the economy of a Too little , Too late fiscal program highlighting the vulnerability of displaced workers and small businesses .
• The policy baton is likely to once again be passed on to the Fed. With an insufficient fiscal stimulus , the Fed would have plenty of work to do.
• Equity markets may rejoice over the fact that possible threats to corporate earnings , such as higher corporate taxes and tougher regulation , now look more remote . Against this stands an increased macro risk .
• Market leadership among equity sectors this year has been based on policy assumptions which
may not hold up.