General Question

crazyguy's avatar

Are the markets rising because Biden won?

Asked by crazyguy (3207points) November 8th, 2020

For some time now, posters here have pointed out (correctly) that stock markets do better under Democrats than Republicans. However, I think the markets do best with divided Governments. So I think the markets are cheering the fact that the Democrats did not do as well as polls indicated.

What do you think?

Observing members: 0 Composing members: 0

30 Answers

gorillapaws's avatar

Markets hate uncertainty. My guess is that the election seems pretty definitive.

JLeslie's avatar

November.

crazyguy's avatar

@gorillapaws You are right in saying that markets hate uncertainty. But I think it is also true that markets dislike certain outcomes. One of those outcomes would have been, in my opinion, the kind of blue wave that was predicted.

The rest of you: thanks for your predictable one-word answers.

Tropical_Willie's avatar

@crazyguy Thanks for a predictable nonsensical response !

JLeslie's avatar

I’ll add some words. Look at your statements the last ten years. Stock market usually goes down in October, and bounces back in November. It’s a fairly regular pattern.

crazyguy's avatar

@JLeslie Do you notice anything different about this November?

gondwanalon's avatar

The stock marked is still strong because Republicans will likely retain control of the Senate. This will ensure a do nothing Congress.

crazyguy's avatar

@gondwanalon Yes, indeed. It is well known to experts that the markets love divided, do-nothing governments.

JLeslie's avatar

@crazybuy I am talking about almost every November no matter what is happening in the world or the country, because October is always down. That’s the bigger part of the pattern, October is always down.

Pfizer announcing 90% effectiveness for their vaccine helped today.

SEKA's avatar

I don’t think that the markets are doing well because Biden won. I think that they are ecstatic that trump lost. Although many corporations could have benefited from 4 more years of trump, they also realize that his wildcard, knee-jerk reaction to everything could mean immediate doom for their future. trump was your best friend until he changed his mind and his mind seemed to change with the wind. Most corporations prefer stability and the stable genius couldn’t give the that

crazyguy's avatar

@SEKA What do you think the markets would have done if the predicted Blue Wave materialized?

crazyguy's avatar

@JLeslie Here is a quote: “The October effect is considered mainly to be a psychological expectation rather than an actual phenomenon as most statistics go against the theory.”

I do not have time to check the actual statistics, but it would seem that the link is non-existent.

By the way, the quote came from:

https://www.investopedia.com/terms/o/octobereffect.asp

SEKA's avatar

Did you hear that Biden was officially named the President-elect last night and the Dow hit 30,000 for the first time in its history. I’d say that the stock market was getting tired of the chaos

crazyguy's avatar

@SEKA Does that tell you something about what Wall Street expects from the Biden presidency?

SQUEEKY2's avatar

Yeah,calm and steady growth.
The stock market doesn’t like chaos .

crazyguy's avatar

How about a corporate tax increase?

Tropical_Willie's avatar

How about 85% of the taxpayers paying less income taxes ? ? ?

JLeslie's avatar

@SQUEEKY2 You see it as calm and steady growth? I see it as exponential growth and a scary bubble.

crazyguy's avatar

@JLeslie Biden is on record (whatever that means) saying that he will raise the corporate income tax rate from 21% to 28%. If that 33% increase in corporate income taxes comes to pass, Wall Street will be stuck in the doldrums for years. The fact the market keeps going up is because of the hope that the Republicans will be able to nix the increase.

JLeslie's avatar

@crazyguy Quite honestly corporate taxes are so very tricky to me. I think lower taxes help drive businesses to stay in America, which is important, but I also think corporations shouldn’t be able to get out of paying taxes like they do. It would take a long conversation for us to hash it out. I tend to be very moderate on the topic, I see the conservative argument and the liberal one.

It would be nice if Americans who own companies did feel an obligation or as part of the integrity of the company, to stay in America as long as the taxes are reasonable.

Companies like Amazon the tax rate doesn’t matter, because they didn’t pay taxes. It’s like the interest rate on my credit card, I have no idea what it is, because I never pay interest, I pay all in full.

crazyguy's avatar

@JLeslie I am not arguing whether corporate tax is good or bad. I am just trying to rationalize Wall Street!

JLeslie's avatar

@crazyguy Well sure, your Wall Street angle is very plausible.

crazyguy's avatar

@JLeslie I guess my hypothesis will be tested (hopefully not!) if both GOP candidates lose in Georgia.

gorillapaws's avatar

@crazyguy Don’t worry, Joe Mansion is a Republican in all but name (so is Biden for that matter). You can look forward to 4 years of inaction except for pro-business policies and war mongering.

Sure they may try to pass some symbolic stuff like the Paris Climate Agreement, but it’s non-binding so it’s basically meaningless.

Strauss's avatar

@crazyguy _ I think the markets do best with divided Governments._

It used to be so until the 1990’s. The Republicans, with Newt Gingrich as Speaker of the House, seemed to embark on a course of obstructionism. That’s when the Federal Budget was transformed from a real budget to a series of “continuing resolutions”. That’s why the Affordable Care Act (aka Obamacare”) turned out to be a pale shadow if what it could have been in its original concept. The divisiveness and polarization. This has led to the Republican mantra becoming something like “compromise is failure”.

But I digress…I think the markets are rising with confidence that the Biden administration signals a desired return to “normal”...although with the pandemic no-one knows when that might happen, or how the “new normal” might look.

There is a lot more to the markets at this time than just the party of the incoming administration. Not only is the economy being ravaged by the pandemic, but there are a lot of other issues that investors seem to bob optimistic about with a Biden administration. This country’s politics are so oppositional that people are seriously talking about armed insurrection. We have had so many named tropical storms that we had to go past the Latin alphabet and name them Alpha, Beta, etc. There are communities that are still suffering from the effects of wildfires this past season. There are so many indicators that investors see that have been crowded out of the nation’s consciousness, each one if which would make headlines otherwise.

crazyguy's avatar

@gorillapaws You meant Manchin, I think. Perhaps your misspelling was deliberate?

I think you said the magic word in your answer: “inaction”.

@Strauss I agree that markets do well with divided government. When the blue wave did not materialize, the markets were delighted. Going forward, as long as Republicans capture at least one of the Georgia Senate seats, the markets will stay happy.

However, if there is the possibility of Biden being forced to propose progressive policies which have a chance of becoming law, watch out.

Strauss's avatar

It is all well and good to talk about the effects on the stock markets, but the real concern is the effects on the individuals who work for these industries being traded.

I’m talking about the 315,000 (and counting) seats at tables throughout this country that a will be empty, not for social distancing, but because that’s how many have died due to this pandemic. The Our first priority must be to get a handle on this pandemic.

crazyguy's avatar

@Strauss I agree 100%. I believe the best way (perhaps the only way) is with the vaccine.

Answer this question

Login

or

Join

to answer.

This question is in the General Section. Responses must be helpful and on-topic.

Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
or
Knowledge Networking @ Fluther