Macroeconomic & Geopolitical

Don’t Forget the Winners & Losers that Weren’t on the Ballot

November 2020 – 3 min read
Beyond all the victorious and defeated candidates, the U.S. election marked some fresh directions that investors need to watch.

The 1884 presidential campaign included charges of personal corruption and children out of wedlock, and yet Walt Whitman managed to celebrate the majesty of “America’s choosing day” as its “powerfulest scene and show.” It’s a good reminder as we navigate last week’s laborious tabulations, mounting litigation threats and ominous street protests. 

Two conclusions stand out. Americans are engaged in politics in ways we have not seen in a long time, even if they remain deeply divided. The economy still looks like it’s headed for a slow, uneven recovery, as long as fresh COVID-19 cases don’t trigger significant new restrictions. This, at least, is the picture that emerges from winners and losers that were not explicitly on the ballot last week.


Political Participation: As a percentage of eligible voters, this was the highest voter turnout rate since 1900. Buoyed by high emotions and extended early voting periods, more than 160 million votes were cast. For a country that constantly broods over voter apathy, there is fresh engagement in both parties. 

Corporate America: Even if Democrats take control of the Senate, which now looks dependent on January run-off elections in Georgia, their majority will be small and reliant on centrists. Big corporate tax hikes look much more difficult, as does major new legislation to cap drug prices or regulate big tech firms. Banks will also heave a sigh of relief that a Biden cabinet will not likely include Elizabeth Warren at the Treasury Department.

“The close result still represents a resounding victory for Trump’s refashioning of the Republican Party around a more nativist political philosophy and barehanded governing style. Ronald Reagan’s party, which embraced free markets and global engagement, looks gone forever.”

Brand Trump: Even without securing re-election, President Trump’s large vote total represents a resounding victory for his refashioning of the Republican Party around a more nativist political philosophy and barehanded governing style. Ronald Reagan’s party, which embraced free markets and global engagement, looks gone forever.

Stocks: More fiscal stimulus looks to be firmly on track, although the ultimate size will depend on the final Senate tally. A Democratic president and Republican Senate may deliver a package that is closer to $1.5 trillion than $2 trillion, but Biden is planning a second round of spending on infrastructure that a narrow Republican majority will find difficult to resist. A Trump victory could have even delivered a package during the “lame duck” session of Congress next month, but that would require a president that is not distracted by vote count litigation. Unless COVID restrictions force significant restrictions in activity, all of this bodes well for growth and risk assets next year. 

Climate Policy: Assuming the Biden lead holds until the Electoral College assembles, there will be a dramatic shift in federal efforts on climate change. Rejoining the Paris Climate Accord, which the U.S. officially left last week, is a promise for “Day One” but the complex effort to reverse much of the Trump administration’s deregulation will begin soon thereafter, even if sweeping legislation proves difficult.


Pollsters: Everyone’s favorite scapegoat has been the “prediction” industry that broadly painted a picture of smooth Democratic success, especially in battleground states. It turns out, of course, that their task is no easier than those of economic forecasters or epidemiologists. It seems that this time they struggled with measures of turnout and voting that occurred over several weeks. In the absence of anything better, like a Ouija board, expect the fresh polls to start predicting the mid-term elections of 2022 before Washington’s cherry blossoms next appear.

Globalization: The flows of goods and services around the world will hardly stop, but efforts to open new markets, align international standards and deepen economic integration are on extended hold. Biden may be more of an internationalist than Trump, but neither will push for major trade agreements in the next four years, and neither will shy away from tariffs when they think the leverage helps. 

China: While the relationship under the Trump administration turned difficult and dramatic, the complexities will only grow under a Biden presidency. For all his rhetorical flourishes, Trump’s engagement with China remained laser-focused on the bilateral trade balance. While Biden’s style would be more traditional, he would be just as focused on trade, but would also bring in more emotional issues around Hong Kong, Taiwan and the South China Sea. These will likely make progress harder rather than easier.   

Treasury Bonds: Rates will be low under any circumstances with a Federal Reserve committed to providing support to the recovery. But if the recovery continues and fiscal policy lends some support, then yields look more likely to drift higher than lower in the near term. Again, this all depends on pandemic dynamics not taking a dramatic turn for the worse.

Britain: While President Trump had little patience for European institutions, a Biden administration will likely re-engage with the European Union and its largest members quickly. Boris Johnson’s hopes for a quick U.S. trade deal after Brexit were never realistic and seem likely to suffer a further setback.


Overall, it’s a picture of a country that is engaged, divided and changing fast. Yet it’s still an economy that is recovering steadily from severe lockdowns and ready to throw some money at the problem. It’s also mildly good news for investors, as long as they can peer through the thick “leaves of grass” for what comes next.

Christopher Smart, PhD, CFA

Chief Global Strategist & Head of the Barings Investment Institute

Any forecasts in this material are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Investment involves risk. The value of any investments and any income generated may go down as well as up and is not guaranteed by Barings or any other person. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

Any investment results, portfolio compositions and or examples set forth in this material are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this material No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments. Prospective investors should read the offering documents, if applicable, for the details and specific risk factors of any Fund/Strategy discussed in this material.

Barings is the brand name for the worldwide asset management and associated businesses of Barings LLC and its global affiliates. Barings Securities LLC, Barings (U.K.) Limited, Barings Global Advisers Limited, Barings Australia Pty Ltd, Barings Japan Limited, Baring Asset Management Limited, Baring International Investment Limited, Baring Fund Managers Limited, Baring International Fund Managers (Ireland) Limited, Baring Asset Management (Asia) Limited, Baring SICE (Taiwan) Limited, Baring Asset Management Switzerland Sarl, and Baring Asset Management Korea Limited each are affiliated financial service companies owned by Barings LLC (each, individually, an “Affiliate”).

NO OFFER: The material is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service in any jurisdiction. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This material is not, and must not be treated as, investment advice, an investment recommendation, investment research, or a recommendation about the suitability or appropriateness of any security, commodity, investment, or particular investment strategy, and must not be construed as a projection or prediction.

Unless otherwise mentioned, the views contained in this material are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Individual portfolio management teams may hold different views than the views expressed herein and may make different investment decisions for different clients. Parts of this material may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this material is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any service, security, investment or product outlined in this material may not be suitable for a prospective investor or available in their jurisdiction. Copyright in this material is owned by Barings. Information in this material may be used for your own personal use, but may not be altered, reproduced or distributed without Barings’ consent.