Jul 15, 2020 - Economy & Business

What a Democratic wave in 2020 could mean for asset prices

Data: BofA Global Investment Strategy, Bloomberg, Haver; Table: Axios Visuals
Data: BofA Global Investment Strategy, Bloomberg, Haver; Table: Axios Visuals

More asset managers are starting to consider the "rising probability of political 'blue wave'" with Democrats sweeping the White House and Congress in the fall, strategists at Bank of America write in a note.

Where it stands: The analysts note that Oddschecker.com is factoring in a 57% likelihood of a win for Joe Biden, while Real Clear Politics puts a 62% likelihood on Democrats taking the Senate. BofA's data found annualized returns for assets from 7 out of 21 "blue waves" since 1928. The analysts also cite the likelihood of a "Blue Deal" fiscal stimulus in 2021 that would include infrastructure, student debt forgiveness and health care spending, which would be positive for value stocks and banks.

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