Goldman Sachs' US equity chief says markets are expecting a blue wave election victory — but a vaccine will be more important than who wins

  • Goldman’s David Kostin told CNBC on Tuesday that markets are expecting a blue wave election victory, citing polling and betting market data.
  • The chief US equity strategist said that consequential moves in the market may not be that dramatic because a large fiscal stimulus may offset higher taxes proposed by a Democratic government.
  • He added that ultimately a vaccine for the coronavirus is more important for the future of the US economy than who wins the election.

Goldman Sachs’ David Kostin told CNBC on Tuesday that markets are pricing in a blue wave victory, and consequential moves after the election may not be dramatic.

The chief US equity strategist said investors are looking at polling and betting markets that have recently demonstrated a consensus expectation of a blue wave. He also said that the recent back-up in interest rates could be because investors are expecting a large fiscal stimulus that stems from a Democratic sweep.

“The expectation of a fiscal stimulus, a very large fiscal stimulus is certainly starting to creep into people’s earnings models and forecasts,” Kostin said.

He added that any consequential movements in markets after this outcome may not be dramatic, as additional fiscal stimulus from a President Biden would likely offset the higher corporate taxes he has proposed.

“From a fiscal stimulus point of view, that is additive to earnings, there’s more revenues for corporations. The taxes, basically would reduce some of that,” he said.


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The timing of the tax proposal under Biden presidency is “critical” for how markets move. He expects the taxes to be “phased in” and said they won’t impact earnings until potentially 2023.

The stock chief also said that ultimately a vaccine matters more for the future of the US economy than the presidential election.

“It’s a medical problem that has disrupted the economy and society, and ultimately there needs to be a solution and the vaccine really is the most important issue.”

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