Elections and Expectations

Elections and Expectations

America has a revolution every four years. It's a quiet yet earth shaking one every time and it reaches its high point today. Casting of ballots is an exercise in power by the masses where the mighty and powerful await judgement upon them by the electorate. It's majestic in its outcome yet mundane in its process.

As always, OneNorthStar seeks to be politically aware yet favors no political party or politician, looking solely for their potential market or economic impact.

So, when the dust settles on this election, we would have either reelected a Republican or newly elected a Democratic President. Few thoughts...

• Presidents are powerful yet do not control markets. Ability to pass legislation is what ultimately counts.
• Having a friendly Senate and House is also no cake walk for a Presidents legislative agenda (Obama in 2008 on the back of a Blue Wave had a Democratic controlled Senate and House, yet could pass minimal legislations which were moderate in their scope from original proposals)
• There is much talk about a Biden portfolio or a Trump portfolio. A Biden portfolio is thought as one which is green energy heavy, while a Trump portfolio would have Coal stocks based on his 2016 campaign. (However, if one invested based on that, we would find ourselves much poorer (~70% since 2016) as Coal stocks have tanked since.
• Demand and Supply ultimately determine market direction which in turn are driven by Consumers, Investors and either aided or disrupted by Regulations, Yield Curve and Innovation. Our role is to figure out the impact of these factors.

As we have said in the past briefings, Elections are decided by turnouts and this time it's already a record breaking one from the early reports. Early opinions...

• Florida, Georgia & North Carolina results expected around 9 p.m. EST will be the earliest indicator of direction of results, else it will come to Pennsylvania & its 20 electoral votes to decide.
• Ballots in PA and other states could take time to count, yet any market volatility is likely to be short term (2-3 weeks) as scenarios possible have been talked about in the media for months, so the power to surprise is vastly reduced (unlike in 2000) and markets are ready for such outcome.
• Senate will be less Red while the House will be a deeper Blue is our forward view

SUMMARY

• Growth stocks will continue to be at a premium in this uncertain world while market returns this year are typically back end heavy as uncertainly falls in November and December.
• Tech, Consumer Discretionary, Materials and High Yield are likely sectors which continue to be in your portfolios as overweight's.

We continue to seek opportunities to expand your financial freedom... Together.

Warm Regards...
Team OneNorthStar

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