By Mica Townsend
The year is 2020, and the world is entirely divided about who should occupy the White House from January. Well, not entirely … one indomitable group is torn between their conscience and their personal financial interests: investors. Despite his many short-comings, President Trump is seen as a champion of the stock market. For him, it is the most reliable gauge of his own performance, and he acts accordingly.
Per the S&P500 Index, up 40% over the first three years of his reign, he was doing great. His corporate tax cuts in 2017 provided the early impetus. And when the market stalled in 2018, he broke one more taboo, openly pressuring the US Federal Reserve to lower rates. Eventually they did, feeding another rally and his sense of omnipotence.
US elections traditionally spark a forecast frenzy on how the outcome will affect the stock market. This year saw broad agreement that Joe Biden would get too distracted by the important issues of the day to nurture the S&P. He would raise corporate taxes, rein in Big Tech and Big Pharma, and refocus on environmental issues and renewable energy, both at the expense of oil.
This, however, assumed that Democrats would also gain control over the Senate, which is now ruled out, making it almost impossible to pass major reforms. Such political paralysis frustrates lawmakers but suits investors, who want policy certainty. Four years ago, investors were similarly concerned about a Trump presidency, and his ‘America First’ anti-globalisation rhetoric.