B. Riley Advisor Talking Points: America Votes – A Nation Divided
What Was America Trying To Tell Us In This Election?
For the past three days, I have been pouring over nearly 475 pages of detailed Exit Polling data from the election.
In the end, President-Elect Biden will have won the election by over 4.5 million popular votes and, at least, 306 electoral votes. That is the same number of electoral votes that President Trump won against Hillary Clinton. Trump then described those 306 electoral votes as a “landslide victory!”
Biden received 75.8 million votes in this election, almost 10 million more than the 65.8 million received by Clinton. This was the highest vote count for any candidate in American history.
But this election was hardly a complete repudiation for Trump. He received almost 8.5 million more votes than he received in the 2016 election. At 71.3 million votes, he received the second-highest vote count for any candidate in American history.
Like everyone else, I have been trying to make some sense of what the American people were trying to say in this election.
It is so clear that there are two Americas and they are fundamentally, deeply divided.
But this election gave me some hope. If you look at the returns carefully in those battleground states, which by definition are the most divided because the results were so close, you will see that there are still a few moderates left in America.
In many of these battleground states, you saw a significant, if small, percentage of voters chose Joe Biden for President and then voted for a Republican for the Senate and House. This was particularly evident in Georgia.
This is why the Senate will most likely remain Republican, but with just a one or two-seat majority.
We saw Republicans pick up a surprising number of House seats that no polls predicted. Republicans also picked up statehouses and state legislative seats.
I think the American people were trying to send a message to Washington DC.
The Exit Poll data seems to indicate a large percentage of voters liked many of Trump’s policies on taxes, regulatory reform and judicial nominees. Still, in open-ended questions, even die-hard Trump supporters admitted that they were fed up and embarrassed by his tweets, lies, and his often lewd, crude and erratic behavior. The exit polling shows this was a clear referendum on the person and personality of President Trump! This was not a policy election.
Most voters of both parties seemed to believe Joe Biden was a decent man, and they also said he more represented how we like to see ourselves as a nation—and as Americans in the world.
According to the Exit Polls, voters of both parties were just exhausted by Trump and embarrassed at how the rest of the world viewed us.
But in terms of policy, it was clear that this election was a repudiation of the policies of the progressive left.
The vast majority of voters stated they opposed socialism and emphatically did not want to become a socialist nation. Most Americans still strongly support capitalism, free markets and free trade.
Voters also said they believe in a competent and effective federal government, but a “limited government that doesn’t go too far.”
Most voters said they were against raising taxes and believed that tax increases could knee-cap this current economic recovery and destroy jobs.
Voters also seemed to reject any suggestion of “defunding the police.”
In general, voters believe in climate change and are in favor of cleaner fuels like solar and wind power. However, they are unwilling to sacrifice fossil fuels and the jobs they create for a more expensive or tax-subsidized plan like the Green New Deal.
It was also clear that voters did not want socialized medicine. But most said they supported and believed Congress could come up with a free-market solution to provide health care to the uninsured and make sure pre-existing conditions were covered for everyone.
With their votes for Biden as President and a likely Republican-controlled Senate, I believe the American people were telling President-Elect Biden; we like you. Still, we are not going to be making a sharp left turn in terms of public policy, and we are going to keep you on a short leash—and Mitch McConnell is going to be your dog-walker!
It seems clear from the stock market’s reaction to the election over the past few days that everyone, at least on Wall Street, loves divided government.
With a Republican Senate, this is what we can expect in the first two years of a Biden Administration:
- No higher taxes that would slow down the economic recovery.
- No Medicare for All.
- No court-packing.
- No Green New Deal.
- No anti-Second Amendment gun legislation.
- No defunding the police.
- No getting rid of coal, oil, natural gas, or fracking.
Biden’s transition staff has said that the new administration will be solely focused on three goals in the first year.
- To create a national plan to fight the coronavirus pandemic and drive down new infections.
- To create a national plan to distribute the first approved, safe and effective vaccines so they can be available to everyone through your local Walgreens or CVS and to encourage at least 60% of the nation to get vaccinated.
- To provide a significant stimulus package for small businesses, hospitals, the unemployed, state and local governments, and anyone else who was hurt by this pandemic, through no fault of their own, until there is a vaccine to get us back to normal. The second part of his economic plan is to pass a $2-$3 trillion infrastructure project to get the almost 12 million people back to work who were employed in February and are now still unemployed. An infrastructure project is expected to employ 7 to 10 million people all over the United States.
How Will All This Affect The Economy & The Stock Market?
About six weeks ago, I wrote in a Market Commentary that Goldman Sachs predicted that the market would go up by about 3% if Biden won. I guess they were right.
I expect the market to do well between now and the end of the year.
Mitch McConnell said this week that he is now open to a stimulus package. Surprisingly, he also stated he was open to helping local and state governments. That was the sticking point in previous negotiations.
Pfizer has announced that their new vaccine is 90% effective and will be available for some by the end of the year and for most of the rest of us early next year. Most epidemiologists do not believe we will be able to vaccinate 60% of the country until the early fall of next year. Until 60% of the country is vaccinated, the economy cannot return to what we remember as normal.
We should also have an announcement of several other safe and effective vaccines in the next two months. This will all be good news for the stock market.
An expected $2 trillion stimulus package now or after January 20 when the new Congress convenes, and next year’s $2-3 trillion infrastructure legislation, will push the stock market higher throughout 2021, if history is any guide.
Since it is unlikely Biden will have control of the Senate, he will be less combative and erratic on trade. Historically Biden has been a supporter of free trade and free trade agreements. But that means the Federal Reserve will be playing a larger role in fiscal policy, which means even lower rates for longer and probably even more Quantitative Easing until the economy gets back to normal. This alone will be another boost to the stock market.
All of these events combined should lift the stock market and restart what is currently looking like a slowing economy.
The overall results of the election were a vote for the moderate center. Many Republicans hated to see their party drift off the edges into tacitly supporting racist groups, militias and QAnon conspiracy theories. This was never who Republicans were as a party.
And Democrats had a choice in the primaries and the general election between the progressive left and the moderation of most Democrats who don’t live in Los Angeles, San Francisco or New York.
The good news is the entire election turned out to be somewhat triumphant for the moderate middle.
We were all so anxious about these elections. We were worried about violence, hacking, foreign interference and voter fraud.
The election ended up running pretty smoothly. Other than President Trump’s unsubstantiated claims of widespread voter fraud, no one and no other politician has come up with any credible evidence that there was large scale misconduct or corruption.
In the end, the election yielded up an inherently moderate outcome.
Everybody got something, Democrats got the presidency, Republicans got gains in the U.S. House, statehouses and legislatures, and it looks like they will maintain a majority in the U.S. Senate.
The American people got a divided government, and for most of us, that is not the worst outcome.
NOTE: This report is authorized for distribution to clients
Paul Dietrich, Chief Investment Strategist, B. Riley Wealth Management
Paul Dietrich is focused on managing investments for private investors, retirement funds, and private institutions throughout the United States. He also serves as a frequent on-air commentator. He regularly contributes market analysis to business and financial media, including CNBC, Fox Business, Bloomberg TV, CNN, The Wall Street Journal, Yahoo! Finance, Reuters, and The Washington Post.
Information and opinions herein are for general use; are not unbiased/impartial; are current at the publication date, subject to change; may be from third parties, and may not be accurate or complete. Past performance is not indicative of future results. This is not a research report or solicitation or recommendation to buy/sell any securities. B. Riley Wealth Management is not engaged in rendering legal, accounting, or tax preparation services. Opinions are the Author’s and do not necessarily reflect those of B. Riley Wealth Management or its affiliates. Investment factors are not fully addressed herein. For important disclosure information, please visit www.brileywealth.com/legal-disclosures.