2020 US Elections: Equities to shift from growth to value under a Biden presidency – TDS

A Biden Presidency might not sink US equities, but it could change sector performance. A potential shift from growth to value and more spending on public goods is likely to result. Globally, a return to foreign policy orthodoxy could benefit global shares at the expense of the US and the USD, per TD Securities.

Key quotes

“Biden would be less US equity positive but less ROW equity negative than Trump. In other words, US equities underperform other parts of the world under Biden, resetting a significant driver of the US rally in the Trump years. Still, a Biden presidency wouldn't necessarily sink US equities but alter the performance of the sectors under the hood.”

“Given the fluidity of world affairs, the election is still light-years away. Yet, if it stands, a democratic sweep offers powerful levers to curb the corporate tax cut and funnel more spending towards public goods. That shifts US equity performance from growth to value, emphasizing national interests (like healthcare and infrastructure) at the expense of global ones. That's likely to hit US profit margins, but if coupled with a less combative foreign policy approach, US equities could still push higher.”

“A rise in anti-trust action (that could stem from a Democratic sweep) could dent the tech sector, which has been one of the single most significant cyclical drivers of US outperformance. In turn, the currency market could start to reflect a reset in broad asset allocation shifts that would benefit a reweighting towards Europe and Asia aided by low to negative US real interest rates.”