The Democrats and markets

Workhorse Group is a share that could probably benefit from a Biden administration.

- Peet Serfontein

Joe Biden became the 46th president of the United States on 20 January, and he took the reins during a time of national discomfort in the face of four crises: the Covid-19 pandemic, the economic downturn, climate change and racial inequality. He promised immediate action, and signed a number of executive orders on his first day in office.

But what does this “blue (Democratic) wave” mean for the stock market?

WORKHORSE GROUP

President Biden has promised to govern as a centrist, which is a political policy that strikes a balance between social equality and a degree of social hierarchy while opposing political change that will lead to society shifting to either the left or right. To me it sounds like six of one versus half a dozen of the other. Biden wants to “build better” with an emphasis on renewable energy and modern infrastructure. These priorities will probably be welcomed by a Democrat-controlled Congress without inviting a filibuster from the Republican senators.

This brings the American presidential election to mind. Regarding the cycle of four years, there is a theory that stock markets are at their weakest in the year following the election of a new president. That means it should be this year.

This points to the presidential election having a predictable impact on economic policy and market sentiment in the US, regardless of the specific presidential policy.