Perspective

Webinar: Trump vs Biden – the economic outlook


Will the polls be right this time? In this live webinar, delivered hours before voting stations close, Keith Wade and Caspar Rock assess likely outcomes and consequences for investors.

"It seems one of the key swings in Biden's favour came after the first live debate," says Keith Wade, weighing up the reliability of election outcome predictions. "We all know what happened last time: Hilary Clinton was ahead, but Trump came in with the victory."

This time round pollsters have adjusted for the "shy Trump" voters, Keith says, but polls can of course be wrong.

While the presidential outcome appears strongly in Biden's favour, there is more uncertainty as to whether there will be a "blue wave" – meaning a Democratic win in Congress as well as the White House. "This is going to be close", Keith predicts.

"It will be interesting to see if people swing from Trump to Biden but, because they feel 'Republican at heart', they may vote for a Republican senator. That could result in a Biden presidency and a split Congress."

On the economy and financial markets...

Longer term, Keith Wade sees a Biden win as leading to higher economic growth for the US, driven by a stronger fiscal boost, increased immigration and less drag caused by protectionist policies. But tax increases would offset this growth over time.

Trade tensions with China are likely to persist, whatever the election outcome.

"Democrats are traditionally the party of protectionism," Keith says. "Biden, like Trump, will be watching the trade agreement with China."

Cazenove Capital's Caspar Rock agrees. "History post World War Two suggests Democrat presidencies have done somewhat better for markets," Caspar says. "But the risks we are watching now are protectionism, increased regulation and anti-trust enforcement."

He points out that a great deal of uncertainty exists away from the election. "A lot of noise is built up around these political events," he says. "But there is a bigger picture. We do not yet have a clear idea of the strength or extent of recovery from the pandemic."

This webinar was one of a series. To attend future events, please look out for invitations from your usual contact.

This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

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Nick Georgiadis

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Simon Cooper

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