The “but what if” factor

Oct 07, 2020 | Jay Zhang


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We all know the market hates uncertainty. So what happens if November 3 comes and goes and we don’t know who the next president is? We explain why we think the market should be able to stomach this disconcerting scenario.

RBC DS-MOUNTAIN RANGE

Increasingly, investors are asking about a range of atypical U.S. presidential election scenarios and, specifically, how these could potentially impact the stock market.


The most common questions asked are: What if the election is contested and/or what if there isn’t a clear winner on Election Day?


Postal routes
The expected surge in mail-in ballots due to COVID-19 restrictions and related health concerns has increased the possibility that election results could be delayed. Some states and courts have established new vote-counting rules that would push back official certification of results.


For example, in Wisconsin and North Carolina, both considered swing states by political analysts, mail-in ballots will be accepted up to six and nine days, respectively, after the November 3 Election Day as long as they are postmarked by that date. If the overall race is tight, and if the vote count is close in such states on the night of the election, the delays could generate some uncertainty for the market. But we think the market is largely prepared for this as it is being well telegraphed.

 

Market pulse
3 Fed’s low rate policy a huge boon
3 Canadian housing surprisingly fairly resilient
4 Europe’s expansion continues, unemployment edges up
4 Tough sledding for the Hang Seng

 

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