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NEW YORK: Wall Street and global financial executives eagerly await a clear winner in the 2020 U.S. election after President Donald Trump called foul play, stoking fears of a lengthy recount that keeps markets and companies hanging.
While the Republican incumbent has granted the financial industry huge tax breaks and victories in deregulation, his first term has also been marked by volatility and unpredictability, particularly in international trade.
Wall Street has leaned to the left in this election, with Democratic challenger Joe Biden beating Trump in fundraising from the financial industry.
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While many executives said they did not support all of Biden’s policies, they believed it would be more predictable and better for the country.
“There was a lot of concern about this election. There were people expecting violence. The White House was hemmed in,” said David Bailin, chief investment officer for Citi’s private banking division.
“Guess what? Now we have something to worry about. If there had been a clear election result, there would have been a busy day. A protracted fight given the kind of tensions could be a bit uglier,” he said.
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Global investors on Wednesday (November 4) began reversing some Biden trades that had caused a jump in major Wall Street indices on Tuesday.
Equity markets, including US equity futures, turned wildly as voting projections in some key states appeared to favor Trump.
European banks that had worked the trading floors overnight reported a long night of conversations with nervous clients. Jim McCormick, global head of desk strategy at British investment bank NatWest Markets, said it would be “all hands on deck” with the outcome still so uncertain.
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Analysts said it could be days before all the votes in battle states are counted, leaving investors and fund managers waiting a long wait before the result is secured.
For many, it was a long way from November 9, 2016 when, without a pandemic, New York City and other financial centers hosted countless informal bar parties, and Trump’s victory was announced around 2.30 a.m.
This year, Mike Novogratz, CEO of New York-based Galaxy Digital and a major Democratic donor and fundraiser, tweeted about being home with a bottle of wine, watching the results on television with his family.
In anticipation of possible protests, some buildings and shops were bricked up in cities such as Washington and New York.
While there were few signs of disruptions or violence at polling places Tuesday, some finance executives said it was too early to rule out civil unrest.
“There are no issues at the moment, but that’s only because there is no answer at this time,” said Billy Weber, chief executive of Checkpoint Capital, a fixed income platform.
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“PERFECT STORM”
The S&P 500 Index has risen 48.8 percent during Trump’s tenure, which he has frequently cited as a measure of success. But Trump has not been uniformly loved by the financial industry.
He has targeted corporate leaders, including JPMorgan Chase & Co CEO Jamie Dimon, and Wall Street bosses have distanced themselves from Trump when he was criticized for his handling of the pandemic and protests for racial justice.
But the American financial industry is also concerned about higher corporate taxes, a new enforcement crackdown, and an emboldened consumer watchdog under Biden.
The former vice president has presented himself as someone who will unify the country and has aligned himself with progressives who are fiercely critical of Wall Street.
Regardless of the winner, a decisive result is key for the global financial community.
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“If we get the Biden win and a split in terms of the Senate staying with the Republicans and the Democrats in Congress, I think the markets would probably take it worse,” said Devan Kaloo, global chief equity officer at Aberdeen Standard Investments.
Still, some young Republican finance executives said they hoped to come together to celebrate a Trump victory.
Charles Kolean, a 25-year-old investment industry worker who spent months raising cash to re-elect Trump, said he had booked a portion of a Dallas bar where he and about 100 friends planned to toast another four years for the president, though wearing masks.
“The perfect storm is gathering to make Donald Trump a two-term president.”
