Markets are closely tracking the transition process between Donald Trump and Joe Biden, which is supposed to be difficult, as the prospects of a big economic stimulus package are dwindling. The Trump clan continues to contest the presidential election outcome, confirming its fraud charges and opening trials in many states. The outgoing president continues to tweet “We’re going to win” relentlessly.
In addition to vaccine expectations, as Congress is projected to remain split between a Democratic Chamber and a Republican Senate, financial markets appear to be pleased with the results of the U.S. election. In view of a program geared towards tax increases and higher taxation of capital gains and wages, this configuration should restrict the reforming ability of Joe Biden, who was not Wall Street’s preferred candidate. With Joe Biden’s victory, the risks of stronger regulations and increased antitrust actions, especially against GAFA, are also higher.
Senate Chairman Mitch McConnell, a Republican Party tenor, also explicitly supports Trump in his stance, further pushing back the possibility of a potential acceptance in the United States of a new major stimulus package. Instead, McConnell supports approximately $500 billion reduced stimulus package, compared to the more than $2 trillion Democrats had hoped for.
Negotiations between Treasury Secretary Steven Mnuchin and House Democratic Leader Nancy Pelosi failed in the weeks leading up to the election. The House of Representatives remained in the Democratic camp after the November 3 voting process, and the Senate is predicted to remain under Republican control, although some seats will be the focus of a second round which scheduled to be in early January.
The Republican camp counts the head of American diplomacy, Mike Pompeo, among its supporters, who also declined to accept the victory of Joe Biden, and also pledged a “smooth transition” to a “second term” to Donald Trump.