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Politics Odds of a Biden presidency are rising according to this stock signal, and a win would pose few risks to the market, LPL says

05:55  26 august  2020
05:55  26 august  2020 Source:   businessinsider.com

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One stock market signal is pointing to rising odds of a Joe Biden presidency , according to a note published by LPL on Monday. LPL said it believes that risks to the stock market are few , and investors should not sell their stocks based on whether Biden or Trump wins the November election.

The US reported 34,567 new coronavirus cases on Sunday, according to data from Johns Hopkins University. The reading is down from 44,572 on READ NOW: Odds of a Biden presidency are rising according to this stock signal , and a win would pose few risks to the market , LPL says ».

Joe Biden wearing a suit and tie: Former Vice President Joe Biden Mark Makela/Getty Images © Mark Makela/Getty Images Former Vice President Joe Biden Mark Makela/Getty Images
  • One stock market signal is pointing to rising odds of a Joe Biden presidency, according to a note published by LPL on Monday.
  • And if Biden does win and become president next year, the risks to the market will be minimal, and no more than the risks posed to the market under an Obama presidency, LPL said.
  • "We do not see a particularly strong reason to fear a Biden presidency from a market perspective today," LPL said.
  • Visit Business Insider's homepage for more stories.

Joe Biden's chances in the poll booth this November are on the rise, according to one stock market signal.

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Callers might need to enter an access code, 8588442, when dialing in. Stitch Fix Inc Registered Shs -A- stock is up 10.30% compared to the same time last READ NOW: Odds of a Biden presidency are rising according to this stock signal , and a win would pose few risks to the market , LPL says ».

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In a note published on Monday, LPL highlighted that a basket of stocks perceived to perform well under a Joe Biden presidency are outperforming a basket of stocks perceived to perform well under a second-term Donald Trump presidency.

Citing data from Strategas Research Partners, LPL showed that the Joe Biden stock portfolio has reached its highest level of relative outperformance to the Donald Trump stock portfolio since February 2020 in recent weeks.

The relative outperformance signals that the market may increasingly view a Biden presidency as likely, though LPL does acknowledge that the individual stocks within the portfolios are driven by other factors as well.

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a screenshot of a cell phone: LPL Research © LPL Research LPL Research

If Biden does win the upcoming November election, the chances of the Democrats flipping the Senate from red to blue are above 50%, according to LPL.

And in a scenario where the Democrats control the House, the Senate, and the presidency come January 2021, Joe Biden will have more freedom to pass his agenda, which can have a direct impact on the economy, and ultimately the stock market.

A recent research note from Liberum showed that the economy and stock market do significantly better under a Democratic president than under a Republican president, as Democratic policy initiatives to stimulate consumption via expanded unemployment benefits and food stamps have a bigger economic impact than Republican initiatives of tax cuts and deregulation.

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Stock prices tend to run in a certain direction over periods of time, and they have done this repeatedly over market history. For those of you who understand A trader should not increase position size or take on more risk (relative to position size) because of a string of wins , which should not be assumed

Stocks “We think a Biden win would be a more positive outcome for Asia equities, with a more predictable and less openly hostile foreign policy toward Inflows A Biden administration “ is likely to de-escalate political tensions with China,” said Sebastien Galy, a senior macro strategist at Nordea

LPL said it believes that risks to the stock market are few, and investors should not sell their stocks based on whether Biden or Trump wins the November election.

"We foresee some market risks in a Biden presidency, but no more than in an Obama presidency, which had a strong stock market record," LPL concluded.

And while one stock market signal is pointing to rising odds of a Biden presidency, another is still pointing to a Trump presidency. Generally, a rising stock market in the three months prior to the presidential election helps the incumbent party, while the opposite is true for a falling market.

Since the three-month clock started ticking on August 3, stocks, as measured by the S&P 500, are up 4% as of Monday's close, representing a benefit to President Trump's re-election chances.

Read the original article on Business Insider

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