The electoral appointment of the year arrives. Americans decide this Tuesday who will be the tenant of the White House for the next four years, and despite the fact that the Democrat Joe biden tops the polls, many advise prudence because they believe that Donald trump it could come as a surprise, as happened in 2016. The scenarios that may arise from these elections are diverse, although now some experts see the "weakness" that a landslide victory for Biden would cause in the markets or the fact that there is no clear winner like a "opportunity" to buy bag.
This is what the experts of JP Morgan in its latest market strategy report, published just before the election. In his opinion, "the risk reward is improving", and that is why investors should take the opportunity to add stocks to their portfolio.
The strategists of the US bank believe that any clear result in the elections would be considered as something "positive", with which "investors can expect a fiscal stimulus in the future." But they assure that there is no need to make a drama if it is not like that. In fact, they claim that if the result is contested, something that can not be ruled out given how tight the polls are in some states, do not allow yourself to be carried away by fear and reduce your risk.
"We believe that if that scenario presents itself, the weakness should be used as an opportunity to add exposure over a 3-6 month horizon"say JP Morgan analysts. And the same must be done if the 'Blue Wave' Joe Biden sweeps the election. "That could initially lead to some weakness as investors would be concerned about the shift to unfavorable policies for the market, but we believe this will also be an opportunity to add" equities to portfolios.
Why? Very easy. According to JP Morgan, a Democratic victory would cause "fiscal support to rise sharply, the dollar could fall, the yield curve would tilt, and trade uncertainty would decrease."
Thus, the bank's advice is clear: "If the US elections result in increased risk, use the weakness as an opportunity to add risk. "These experts advise" taking profits on technology, and adding finance, both banks and insurance, "to portfolios." The next few days, or even weeks, it could be difficult if there is a controversial election result, but we we would use any weaknesses to reposition portfolios by 2021", they conclude.