09 Nov COTW: Gridlock vs. Sweep
Heading into the 2020 election, the most probable outcome according to betting markets was a “blue sweep”. Under this scenario, the democratic party would be able to push through policies, such as tax increases, relatively easily and swiftly.
Historically, U.S. stocks, as measured by the S&P 500, have performed better during periods of political gridlock. Gridlock makes it difficult for major policy changes to pass, preventing policy-related outcomes the market may view as most unfavorable.
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