Via FTAlphaville:
Earlier this week, President Trump urged Americans to vote Democrat if they wanted to see the stock market go down. A blue wave that sweeps away Republicans from both the House and the Senate would no doubt impact financial markets, but when it comes to equity returns, the economic backdrop also matters.
According to Nomura’s George Goncalves, a blue wave is “the biggest tail risk facing the markets”. With Democrats in control, the threat of impeachment proceedings or a future debt ceiling showdown rises substantially. Plus, he points out that Democrats are likely to walk back or put on pause much of the deregulatory push that has bolstered the corporate sector since Trump’s inauguration.
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