The Impact of the 2020 Election Results

The Impact of the 2020 Election Results (4:43)

Terry Herr, CFP® , CLU

Transcript 

Hi this is Terry. Thanks for tuning in. 

Today we're going to talk about the election and the election results and what that means to the stock markets. So right off the bat the fact that I'm wearing a blue shirt has nothing to do with my political affiliation. We do have clients calling and asking us what the election means. 

So before we get into that...Okay now I'm ready. 

So here's what's happened Congress looks like it's going to remain split with the Democrats retaining the House. Republicans still look like they're going to control the Senate, although the verdict is still out on that so take this commentary with a grain of salt because the results still are not fully in. Regardless of who ends up President it is unlikely that we're going to have any extreme policy changes. One way or the other. Filibuster is likely to remain intact. We're not likely to see any court packing from Congress either. Conservatives concerns about a socialist agenda are generally dead for at least the next two years possibly four years depending on who's the President. Democrats concerns about Republicans policies are also mitigated. Democrats are going to have the ability to stop really any legislative legislative changes that they disagree with, So hopefully we'll start to see them come together. 

When it comes to the Presidential Election, clearly half of the country disagrees with the other half of the Country. Hopefully we'll start to see the parties begin to work together when they see that and realize that. I think we should attempt to broaden our understanding of those opinions and views contrary to our own - Really for the sake of civility, friendships and families. So hopefully the fact that the country is split and people recognize that, we'll start to listen to each other. 

Federal tax policy not likely to have any serious shifts in any major directions. Again you're going to need to have one party in control to have significant shifts and that doesn't look like that's going to happen in the Congress.  

Discussions of social justice issues will continue to be challenging and hopefully we can again come to some sort of compromise and agreement on what needs to be done there. 

In Illinois, the most significant issue I think was a rejection of the fair tax amendment. We're likely to see state tax increases. We might see the expansion of exemptions  for lower income earners which effectively would have the same impact as a marginal tax system. We'll probably see property tax increases particularly in the Chicagoland area, Cook County as well. We would likely have also higher debt obligations as the state of Illinois risk moving into risk moving into junk status. Hopefully we'll start to see some pressure on the political leaders to address some of the systemic problems that we have with the size and spending of the Illinois state government. Now shifting into the markets and the economy. 

Just speaking on the political impact of the markets. There are some other potential challenges that are in our economy in the markets but a split Congress helps quell market uncertainty about major policy changes, divided Congress means slower or more moderate policy change which the markets can adapt to. Unfortunately gridlock in DC isn't necessarily viewed as a negative to the stock market - unless it comes to a stimulus package.  Like the coronavirus everybody wants to see that happen 

This gives us some predictability and the market certainly has taken some comfort in that over the last couple of days. So my final thoughts is that after we're done with this election, both sides of the aisle, our family, our friends - we can all come together and recognize the importance of hearing each other's opposing viewpoints and coming to some sort of compromise.  

If you have any additional questions about how the markets in the political climate impacts your portfolio retirement plan questions or any other financial issue please contact us. We're happy to help. That's what we're here for - Have a great day. Thank you 

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