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Blackrock comments on the Markets & the upcoming U.S. Election

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Global investment manager Blackrock Investments, shared their thoughts on what might occur should the election follow the polls as they stand today, with Democratic nominee and former vice-president Joe Biden leading President Trump by a margin of between 7%-14% (depending on the day).

The attached article discusses the three potential election scenarios and how they might affect policy and the markets. For the sake of brevity, I will just focus on the markets.

We should “prepare for higher inflation”, which in turn could bode well for “inflation linked bonds and an underweight position in Government bonds”. They also “prefer high-yield bonds“, although they are not necessarily ideal for all investors as the superior yield comes with greater risk than more traditional government bonds.

On the equity side, Blackrock is underweight Emerging markets while favoring Europe (which has performed poorly this year down almost 22%), believing there will be some “unwinding of the crowded position in U.S. Technology stocks”.

They also like “private assets” (private companies, debt, commodities, real estate and derivative instruments) which are usually reserved for high net worth investors.

Finally, as a theme, they believe that the “tectonic shift to sustainable investing will likely persist and could become supercharged” should the democrats sweep the election.

https://www.blackrock.com/us/individual/literature/market-commentary/weekly-investment-commentary-en-us-20200928-consequential-election.pdf

howard.yancovitch@investorsgroup.com