Betting markets have turned decisively toward Joe Biden — and asset managers at major investment banks are preparing for a Democratic sweep of the White House, Senate and House, Axios Markets editor Dion Rabouin writes.
- Why it matters: Wall Street had its chips on Trump until recently — even in the midst of the coronavirus-induced recession and Biden's rise in the polls.
- The shift shows how quickly the political and business worlds have aligned in the view that Trump is unlikely to win a second term, as COVID-19 infections surge and the economy looks to be stalling.
By the numbers: A Citigroup poll of 140 fund managers released last week found 62% expect a Biden win, compared to 70% who expected a Trump victory in the same survey in December.
- "Talk of a Democratic sweep [is] now common" among investors, Kace Capital Advisors managing director Kenny Polcari said.
Biden's proposed policy reversals from Trump, combined with a Democrat-led House and Senate, could impact every corner of financial markets — from tech, chemical and health care companies' stock prices, to oil futures, private equity investments and the value of the U.S. dollar.
- "We’re looking for higher taxes," Stephen Gallagher, U.S. chief economist at Société Générale, tells Axios, noting that a Biden win now looks "more and more certain."
The context: Since 2016, Trump's lower taxes for corporations have facilitated record stock buybacks and high dividend payments — a boon for stock prices as the Federal Reserve has kept U.S. interest rates close to 0%.
- Biden's proposed tax hikes on individuals, corporations and financial market gains would be the biggest since Bill Clinton.
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