Capital Alpha Partners
Tue 17 Nov 2020 - 15:00
James Lucier began his presentation by discussing the outcomes from the recent US election, aiming to touch upon areas not covered by mainstream media. James outlined issues the upcoming Biden administration will have when faced by an extremely slim House majority and Republican control in the Senate. Furthermore, James highlighted the fact Biden may well be a one-term presidency which could affect his ability to operate effectively, but that most presidents make their more impactful changes months into their presidency. James also touched upon the possibility of Biden being succeeded by Kamala Harris. James then analysed the election results themselves, with Trump and the Republicans exceeding the polls predictions, exposing the growing inaccuracy of electoral polling itself. The pollster’s methodology of telephone surveys is becoming more and more inaccurate, which James blamed in part to their length of 20 mins and that many people no longer answer the phone to unknown numbers. The 2020 election also saw record breaking campaign spending, for example the race in North Carolina where Republican Thomas Tills spent over $250 million to gain his Senate seat. James then speculated on the mood of the Republican party, concerning the attitude towards Trump himself, stating that while many liked Trump policy, few were enamoured with his personal conduct and public image. This apparent success for the Republicans, even though they lost the presidency, will mean that Nancy Pelosi will have a difficult job controlling the House. This is made worse by the Democrats ideological divide between the progressives and the moderates, each blaming their lack of clear majority on each other. James also noted the historic levels of African-American Republican voters, as well as Trump’s apparent success with other minority groups such as Hispanics, who helped him to win states such as Florida, concluding that Trump and the Republicans have clearly set themselves as the new party of blue collar workers. James concludes this section by postulating that the Republicans should have a positive outlook on their electoral future, especially at the State level. James then moved onto policy, discussing the possibility of less federal spending than might have been expected. Biden will focus moderate effort on the environment well as investing slowly in healthcare and infrastructure. James argues that Biden will change very little on the trade and tax front but will attempt to repair international relations with the UK and France that Trump may have damaged. James estimates that Biden’s foreign policy may well shift focus onto China and Iran but not until late 2021/22. Concerning the transition of power, James predicts that there will be less friction that the media is portraying and that by mid-December Trump will be easing out of office. The last-minute policy decisions made by Trump concerning both domestic infrastructure and foreign issues, like China, may cause problems for Biden in the short-term. Finally, James expresses the likelihood that Biden’s cabinet will become moderate to ensure a cohesive Senate, rather than picking progressive figures that could cause division. However, he concedes that individuals like Bernie Sanders or Alexandria Ocasio Cortez will find their way onto Biden’s cabinet.
President-elect Joe Biden is due to be inaugurated on 20th January 2021. Control of the Senate will not be decided until 5th January. This party balance has far-reaching implications for equities and credits in the years to come.
Capital Alpha - with its seven sector specialists - is ideally placed to provide detailed analysis on these unfolding events, the policy implications and their potential impact on the economy and financial markets.
What explains the split result? The outlook for Biden’s legislative, executive, and regulatory agenda. The coalition politics that will define the new Congress.
Thoughts on China, trade, and Biden’s foreign policy.