We received a lot of reaction to our note yesterday morning declaring that from the market’s perspective, Biden was most likely to win, and the worse-case scenarios about post-election uncertainty had been avoided. Today, that has become the prevailing view. To repeat, Biden is in all likelihood the next President, and the Senate will likely be retained by the Republicans. In some ways, that was the best case outcome for the business community. On the one hand, there will not be a prolonged dispute about the election outcome. On the other hand, with the Senate going to the Republicans, some of the more ambitious projects of the progressive wing of the Democratic party are likely not be achievable. Things like Big Tech regulation, climate change plans, higher corporate taxes and so on will now not be as easily achieved, which is the preference of the markets. Stocks have been up strongly over the last two days and the US dollar is down, reflecting the reduced risks overall. The Canadian dollar is up 0.5% and approaching its highest levels since February of this year. The Fed’s news conference this afternoon will be interesting to watch as a potential market moving event. In Canada, tomorrow’s employment numbers will provide further clues as to the state of the recovery after the start of the second wave of the virus.
