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September Market Review: 2020 Election Investment Implications

Christopher LaPorta

September 14, 2020

As the November election approaches, investors are increasingly focused on the investment implications of the divergent policies of President Trump and Democratic presidential nominee Joe Biden. A second term for Trump may focus on deregulation, extension of the 2017 tax cuts or additional tax cuts, and an “America First” approach to international trade. By contrast, Biden’s proposed policies include expanded access to federally funded health care and spending initiatives for clean energy and infrastructure. Biden plans to fund increased federal spending through higher tax rates for corporations and high income individuals. A Biden presidency may also re-regulate some industries such as energy, health care, and technology.

The outcome of the Senate elections will be a key factor in allowing the next president to implement their policies since some parts of each candidate’s agenda requires congressional approval. Polling data suggests there is a possibility that Democrats could gain a simple majority in the Senate while keeping control of the House of Representatives. 

Despite presidential candidates’ policies receiving a lot of attention by investors, history suggests that policy changes from a particular president or political party are less impactful for the economy and stock market than many observers believe. 

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