Eight key takeaways from the U.S. election

By Sadiq S. Adatia, Chief Investment Officer

Opinions as of November 9, 2020

Heading into the election, U.S. markets were volatile. However, following Joe Biden’s win, markets rallied on the hope for greater clarity and an end to the political chaos. Below are eight key takeaways from the election.

1. Biden wins in a close battle: Joe Biden received more votes than any other candidate in history, while incumbent President Donald J. Trump received the second most ever. Trump has however still not conceded victory and has some legal challenges in place, though many say without much merit.

2. Will the Senate turn blue? The Senate is currently majority Republican. A change to a Democrat majority Senate would have allowed Joe Biden to fully implement his policies with less interference from the Republicans. There is still a chance this can occur, with two seats in Georgia to be decided in January. However, the current expectation is that Republicans will keep their majority, resulting in a divided congress.

3. How did the markets react? Markets soared post-election with one of the strongest rallies in recent history. Technology and Healthcare stocks were the biggest winners, while clean energy names lost some momentum.

4. How was Canada affected? We anticipate that there will likely be little overall impact, especially with a divided Congress. The one area that may be impacted is the energy sector, given Biden’s preference to cancel the Keystone XL pipeline.

5. U.S. stimulus plans going forward: A divided Congress could create some gridlock on most policies, including stimulus measures. However, Senate majority leader, Mitch McConnell, thinks that a relief package remains priority number one, so maybe not all hope is lost.

6. Impacts on the COVID-19 pandemic in the U.S.: There is hope that under Biden, more precautions will be taken including encouraging the wearing of masks. But regardless of who is president, successful implementation of a vaccine program still remains a high priority. And recent news from Pfizer’s successful early vaccine trial data has been positive.

7. Global trade ramifications: Better relations with China, Canada, and the Eurozone (except for the UK) can be expected. Relations with Russia, Iran, Turkey and especially North Korea could become tougher.

8. Positioning Sun life Granite Managed Portfolios: We have overweight positions to equities, with our biggest overweight being to the U.S. We have slight overweights to international and emerging market qualities, however that that is tied to global trade discussions being calmer. We also want to remain overweight in active management, as this is the time to keep strong risk management in place with not all companies weathering the storm the same. In terms of bonds, we have overweighted corporate bonds to capture higher yields. Overall, we think this balanced approach is the prudent way to position the portfolios for the post-election period.

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Sadiq S. Adatia, Chief Investment Officer