Archive for November 3rd, 2020

JP Morgan: 25% market drop if there’s a Blue Wave …

November 3, 2020

I don’t provide investment advice, but I do pass along interesting tidbits..

Here’s one hot off the presses: JP Morgan advised clients of likely market reactions to possible election results.

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In a nutshell:

> Market up 15% if Trump wins and the GOP retains the Senate

> Market down 25% if Biden wins and the Dems take the Senate

> Market up 7% if there’s a split decision: Trump, but a Dem Senate … or, Biden and a GOP Senate.

Betting markets have the odds of a Blue Wave at about 55-45.

In a previous post, we channeled a B of A analysis concluding that a Blue Wave would be good for the market.

Draw your own conclusion.

Election: Blue Wave coming?

November 3, 2020

If so, what will the stock market do?
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Interesting analysis from B of A brain trust, channeled thru ZeroHedge

First, the betting markets are still indicating slightly better than even odds of a Blue Wave — Biden wins, Dems win Senate & House.

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Surprising (to me, at least), the B of A analysts conclude that a Blue Wave would be good for the stock market.

The essence of their argument…

In the short-run, Dems would spend like drunken sailors … spiking the economy.

In the long-run, higher taxes would dampen the economy but Dems will likely rein in their tax & spend proclivities to keep from getting blown out in the mid-term elections.

The argument strikes me as a sales pitch to buoy the stock market more than a serious analysis.

On the flipside, they argue that either a Trump win or a GOP Senate will lead to a gridlock-induced stagflation.

I’m not for stagflation, but I’ve always been pretty comfortable with gridlock …

My view: Most of what gets enacted by Congress seems to make my life worse, not better. Viva gridlock.

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And, of course, there are Blue Sweep contrarians.

JPMorgan strategists see “an orderly Trump victory as the most favorable outcome for equities (upside to ~3,900).”

Place your bet…

Election – Battlegrounds – FINAL

November 3, 2020

RCP Average – 6 Battlegrounds
Biden  48.9  Trump  46.6  +2.3

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RCP Battlegrounds – State-by-State

> RCP has Trump leading in NC, Biden leading in the other 5 battlegrounds.

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Trafalgar* Battlegrounds – State-by-State

> Trafalgar has Biden leading in WI, Trump leading in the other 5 battlegrounds

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My election day POV:

> Trump takes AZ, NC, FL … and drags  Tillis & McSally to victory (and Ernst in IA)

> Biden takes MI and WI … James pulls an upset in MI

> PA is winner-takes-all … advantage Trump, but too close to call … controversial counting will drag on

> TX looms as a wildcard given very high early voting volume.

> Collins scores a come from behind in Maine

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* Technical Note:

There are 2 pollsters who are generally credited with getting the 2016 election right: IBD/TIFF and the Trafalgar Group.

The Trafalgar Group leans right, emphasizes state polls & predictions (especially the swing states) and claims to have a proprietary protocol that elicits replies from the “shy Trump voters”.

Nov. 3: C-19 Data Dashboard

November 3, 2020

236,980 Deaths-to-Date

505 Daily New Deaths  (peak 2,824 April 21)
> 7-day average 849    (peak 2.229 April 23)

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Confirmed Cases

88,386  New Cases
> 7-day average  83,655

> Highest day        101,012  Oct. 30
> April 24 peak      36,291
> June 8 low point  17,414

Currently Hospitalized

48,470  Current level
> Highest day    59,840  April 15
> Lowest point   27,895  June 14
> Recent peak    59,715  July 23

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