Between the COVID-19 pandemic and resulting market volatility, coupled with the roller coaster ride surrounding the presidential election, I don’t know many people who will be sad to see 2020 in the rearview mirror. Despite the trials and tribulations of this year, I’m very grateful for what’s positive in my life, and there’s a lot. I’m especially thankful for my family and friends and our continued good health during this time. I feel incredibly lucky to work alongside such a dedicated team at PFG, and I can truly speak for the entire team in saying just how much we appreciate our clients and the trust you consistently place in us.
At this point, the last thing you probably want to read about is commentary on the presidential election, regardless of which party you favor, but it’s hard not to discuss Washington policy at all as it relates to investments. As we head into the Thanksgiving week, remember that the composition of Washington, DC is just one factor in the investor outlook. The overall economy, earnings growth, the policy of the Fed and secular factors all weigh heavily on portfolio performance and are considered in your long-term financial plan. Although we face recounts, potential legal challenges and runoff elections ahead, we have a general idea of what we can expect moving forward.
Although the anticipated blue wave did not materialize, as of this writing, Biden is president-elect, the Democrats maintain the House majority and the Republicans will most likely retain the Senate, but it’s not a guarantee. All eyes will be on the runoff elections, particularly Georgia. With these results, we can expect the following key takeaways:
- Look for a new, smaller fiscal stimulus package, possibly by the end of the year, and likely before December 11 when the federal spending agreement is set to expire.
- The Fed monetary policy will remain largely the same, providing continued liquidity and low-interest rates moving forward.
- Tax increases will be taken off the table if the Republicans maintain the majority in the Senate. Otherwise, we may be looking at a 10% reduction in corporate earnings in 2021.
- Trade relations may improve, particularly with Europe, resulting in increased earnings for large multinational companies.
If you’d like some to learn more, visit Raymond James’ 2020 Election Policy Insights for in-depth discussions from Raymond James thought leaders, including Larry Adam, CIO and Washington policy Analyst, Ed Mills.
Thanksgiving is sure to look and feel a little different this year as we may have to cancel travel or gather in smaller groups than usual. I plan to spend the holiday relaxing with my family and I’m definitely going to try my best to ignore reports of increasing cases of COVID-19 and election fallout talk, even if just for the day. Football definitely helps with that! From all of us at PFG, we wish you and your loved ones a very Happy Thanksgiving and I truly hope you can relax and get away from the headlines!
Todd M. Wike, CFP®
CERTIFIED FINANCIAL PLANNER™
Managing Partner, Potomac Financial Group
2020 RJFS Chairman’s Council Member*
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