Business on Biden: Not So Bad, Given the Alternatives; Stocks Typically Climb, Regardless of Who's in the White House; Friendly wager on the presidential election for charity; Goldman Sachs settles 1MDB charges; My wife is doing well
1) All eyes are focused on the election a week from today... and a lot of people are losing their minds – panicked at the consequences if their candidate/party loses.
This fear isn't entirely irrational, as this election will indeed have major, lasting implications for many important issues.
But when it comes to the stock market, I urge you not to panic – either today or after the election – because I think stocks are going to do fine, no matter what happens (unless there's a contested result that leads to major instability, which I think is unlikely).
We know that President Donald Trump has been good for the stock market – just look at where it's at: the S&P 500 Index is within 5% of its all-time high reached on September 2, despite the massive damage the coronavirus pandemic has inflicted on our country.
As for former Vice President Joe Biden, I think he's unlikely to push for radical changes that sink stocks. If you look at his nearly half-century career, it's clear that he's not part of the far left like Sens. Bernie Sanders or Elizabeth Warren (both of whom he defeated in the primaries, which says something about where the center of the Democratic Party is), much less Rep. Alexandria Ocasio-Cortez.
Many businesspeople are coming to this realization, as this front-page story in yesterday's Wall Street Journal highlights: Business on Biden: Not So Bad, Given the Alternatives. Excerpt:
Former Vice President Joe Biden is running for president on the sort of platform that usually makes business sweat: higher taxes on corporations and investors, aggressive action to phase out fossil fuels, stronger unions, and an expanded government role in health care.
Yet many business executives and their allies are greeting the prospect of a Biden presidency with either ambivalence or relief. Credit that not to who Mr. Biden is, but who he isn't: Elizabeth Warren or Bernie Sanders, senators with a much more adversarial approach to business who lost to Mr. Biden in the Democratic primary, or President Trump, whose administration has been marked by economic-policy unpredictability.
"If Elizabeth Warren or Bernie Sanders were the nominee, we'd be having a very different conversation and thinking through our engagement in a very different way," said Tim Adams, president of the Institute of International Finance, which represents global banks. "With Biden, what you have is someone who in many ways is a throwback to a different era, who thinks about, 'How do you get things done?'"
Asked how Mr. Biden would deal with business, his allies describe him as pragmatic. "Joe Biden is driven less by the politics of the moment and more by which policies he believes will be most effective in lifting up the middle class," said Jared Bernstein, an economist who served under Mr. Biden when he was Barack Obama's vice president, and still advises him.
2) It's also important to keep history in mind, as this WSJ article notes: Stocks Typically Climb, Regardless of Who's in the White House. Excerpt:
For investors worried about how the stock market will fare in the event of a divided government or a sweep by either party in next month's elections, history offers an important lesson.
Stocks tend to go up regardless of which party controls Washington.
From 1929 through 2019, one party controlled both chambers of Congress and the presidency in 45 of those years. The S&P 500 on average rose 7.45% during those years, according to Dow Jones Market Data. The index was up 30 times and down 15 times.
In the other 46 years when there was a split government, the index climbed 7.26% on average, rising 29 times, falling 16 times and remaining unchanged once.
3) According to nearly every poll and betting site, President Trump is likely to lose the presidential election.
The estimates vary – The Economist gives him a slim 4% chance of victory, while real-money betting site PredictIt gives him a 40% chance.
I've said it many times: Biden is likely going to win (but to be clear: I'm not making a political statement about what I want to happen – this is merely my best, unemotional assessment of the odds).
If you disagree and think President Trump will win his re-election bid, then let's make a friendly wager to benefit either your favorite charity or mine (KIPP charter schools in New York City, on whose board I've served for the past two decades).
I've done these wagers for each of the last three presidential elections, and they've raised nearly $100,000 for KIPP and various other wonderful charities.
To participate, just e-mail me at WTilson@empirefinancialresearch.com and let me know how much you'd like to wager – ranging from a minimum of $100 to a maximum of $2,500. I'll accept all offers up to a total of $25,000.
4) The stock of investment bank Goldman Sachs (GS) is a recommendation in our Empire Stock Investor newsletter, so it's good to see the company finally put the 1MDB scandal behind it: Goldman Sachs to Pay $2.8 Billion, Admit Wrongdoing to Settle 1MDB Charges. Excerpt:
Goldman Sachs will pay about $2.8 billion and admit wrongdoing to end a bribery probe that stretched from Southeast Asia to Hollywood and reinforced a reputation for scandal that the Wall Street firm has spent years trying to shed.
The settlement with the Justice Department, expected as soon as this week, would resolve an investigation into Goldman's work for a corrupt Malaysian government fund known as 1MDB, people familiar with the matter said. Prosecutors have accused an international cast of characters – including two Goldman bankers – of embezzling billions of dollars from the fund, and U.S. officials had been preparing a case that the bank ignored signs of fraud in pursuit of fees.
This is also good to see: Goldman is clawing back or cutting millions in pay from CEO Solomon, Blankfein, and others over 1MDB. Excerpt:
Goldman Sachs is moving to claw back or cut a total of $174 million in compensation from current and former employees including CEO David Solomon and former CEO Lloyd Blankfein over the 1MDB scandal.
This is what I wrote about the scandal in my June 10, 2019 e-mail:
Here's comedian Hasan Minhaj with a 19-minute segment on his show Patriot Act with an overview and the latest developments about Jho Low and the 1MDB scandal, which has rightly engulfed Goldman Sachs. It strains credulity for Goldman, which earned many times its normal fee to raise money for this scam, to now claim that it didn't have any suspicions because it was deceived by a couple of rogue employees. Yeah, right!
For more on this, I recommend one of my favorite books in the past year, Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World.
5) Thank you for all the kind wishes in response to yesterday's e-mail about my wife Susan being struck and knocked unconscious by a bicyclist in Central Park on Sunday.
Yesterday morning, I accompanied her to see Dr. Teena Shetty, a concussion specialist at the Hospital for Special Surgery, who said she definitely had a concussion.
Given that Susan is feeling good and aced the cognitive tests they gave her, Dr. Shetty said her prognosis is excellent. But to ensure a full and quick recovery, she put Susan on full "brain rest" for at least a few days... possibly a week, depending on how she's feeling. That means she's not supposed to read, look at her phone or computer, watch TV, or listen to podcasts or Audible books. (I hope I never get a concussion because I could never adhere to any of that – LOL!)
Susan can, however, talk on the phone, visit with people, and take occasional short walks, so that's what she's doing!
Best regards,
Whitney