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.


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?

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.


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.


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


RCP Battlegrounds – State-by-State

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



Trafalgar* Battlegrounds – State-by-State

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



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


* 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)


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