No clear winner in the US election

7 November  2020

Dear Fellow Investor,

As of today there is no clear winner in the US election as all the votes are not yet counted. Biden is leading in a few key states which will determine the winner. The odds favour Biden to win although the results are being hotly contested.  Contrary to opinion polls, there was no blue wave in which the opposition party Democrats would sweep to power and have absolute political control in a landslide.  Markets reacted favourably to the results as there was no clear winner and odds favour that the Republicans would continue to control the senate and the upper house of congress. If the Republicans control the senate, Biden could not pass his socialist policies including universal basic income, personal and capital gains tax increases, green new deal which eliminates natural gas and crude oil production, student loan forgiveness, free health care and supreme court packing to install socialist activist judges.

Trading nations including most world markets and  Singapore, Hong Kong, Japan and Malaysia  had strong up moves  on the potential of US legislature gridlock. If Biden is declared the winner, he  will take a less confrontational trade approach to Europe, Asia and China. He wishes to re-join the TPP and renew European trade agreements.

The US Dollar and the VIX dropped while gold, bitcoin and most commodities  jumped  higher.  This anticipates currency debasement, massive money printing and more stock market gains as well as monetary and fiscal stimulus. Mitch McConnell who is the majority leader of the US Senate and Joe Biden although of different political parties are close friends going back many years and may agree on stimulus aid for economic recovery.  

On the home front, the Malaysian budget announced yesterday is the largest in history. There is money for everyone. The technology  and consumer indexes performed well Friday anticipating growth moving forward.

Expect a rebound in 2021  as world growth picks up, lockdowns are less and progress is made with  Covid vaccines and treatments.  China is now distributing a vaccine to  their front line workers and there are 8 vaccines in 3^rd stage trials and if proven will be mass distributed.   

There are very few or no Covid cases in Korea, China, Taiwan and Singapore. Malaysia is making progress. Death rates have dropped. Gradually we are getting back to normal.  Hopefully we can soon travel again.

Take care

Bill

The donkey and the elephant are the symbols of the Democrats and Republicans in the US. The divide gets deeper. Growth, jobs, economic and pandemic recovery could bridge the gap.