Wall Street analysts see a rising probability of a "blue wave" Democratic sweep of the House, Senate and presidency, Dion Rabouin writes in his daily newsletter, Axios Markets.
- Investors have been pricing in a Biden win for weeks. Now analysts at many top firms are preparing for a like-minded Congress.
Why it matters: With a blue wave, Joe Biden could realistically enact major policy shifts that include higher taxes, climate reform and health care spending.
That's got investors designing what Ed Yardeni, president and chief investment strategist at Yardeni Research, calls a “Biden Blue portfolio.”
- "Winners in a blue wave," Yardeni writes to clients, "likely would be domestic energy-efficient technologies (e.g., wind and solar), railroads, homebuilders, building contractors, and engineers, manufacturers and material suppliers, broadband network providers, utilities, autos, medical suppliers, and innovative technologies (e.g., artificial intelligence)."
The risks: Influential Democrats, including Rep. Alexandria Ocasio-Cortez and Sen. Elizabeth Warren, have advocated for wealth redistribution, wealth taxes and breaking up Big Tech companies.
Markets "will eventually react positively to the increase in government spending," argues Lee Ferridge, head of global macro strategy at State Street.
Go deeper: Alexi McCammond unpacks this morning's Biden plan for caregivers.
- 💰 Sign up for Dion Rabouin's weekday newsletter, Axios Markets, and get his "Don't sleep" warning about a blue wave.