Who’d be a pollster?

The US election is coming down to the wire, with President Donald Trump prematurely claiming victory as votes are still being counted feverishly all over the country. Of all the years, head of multi-asset investments David Coombs laments, this one could have done with an early, decisive result.

US election mail

I have sat through many elections over the past 40 years or so and yet I can still be shocked. That a country that leads the world in technology can make such a Horlicks of an election count.

There is one result we already know: election organisers and pollsters have lost … again.

Of all years, this was one when America – when the world – needed a swift, decisive result. Now President Donald Trump is declaring that he has won and that no more votes should be counted. He is going to the Supreme Court, so we can expect lawyers to get rich again.

What does this mean for strategy? Well, whoever wins, the Republicans look like they should retain the Senate, so the ‘Blue Wave’ was becalmed. It probably means any further fiscal stimulus may well be more cautious. Dow Jones futures have moved down sharply, so cyclicals’ outperformance versus ‘growth’ and technology stocks is unwinding. The US 10-year bond yield is falling as well, so the bond market is telling us that fiscal expansion will be more limited. Both of these moves are pretty logical at the moment.

I’m not going to try to be too clever here. I still believe a focus on the long-term drivers suggests that digital technology, medtech and quality industrials give the right balance within our multi-asset portfolio funds’ equity allocations. The volatility we are likely to see over the next few days could be a fantastic opportunity to reduce our cash weightings.

Despite this embarrassing situation for the US, I still believe in the American economy and the ability of corporate America to continue to innovate and grow.

If Mr Trump does win, the equity market may well be soft for a few weeks or months. But at the end of the day it will mean the status quo remains, and that’s ok for US stocks in my view. Once again, emotions are running high. Yet don’t forget that the US economy and its stock market performed very well until the pandemic arrived. It’s important to keep a focus on the longer-term investment drivers this morning.

If Mr Biden wins, we should – hopefully – have a relatively smoother four years of governance for the American juggernaut. It would likely send bond yields and cyclicals higher too. During the campaign, Mr Trump, AKA the Apprentice President, dubbed Mr Biden “Sleepy Joe.” I would hope he would live up to the name if he wins – we could all do with some rest.

But if this drags on with a contested result, the markets won’t like it one bit.




Important legal information

This area of the site is for professional advisers

Please read this page before proceeding, it explains certain legal and regulatory restrictions applicable to the distribution of this information. It is your responsibility to inform yourselves of and to observe all applicable laws and regulations of the relevant jurisdiction.

This section of the website is directed only at investment advisers and other financial intermediaries who are authorised and regulated by the Financial Conduct Authority (FCA).

The information provided in this site is directed at UK investment advisers only and must not be circulated to private clients or to the general public. It does not constitute an offer to sell, or solicit an offer to purchase any investments by anyone in any jurisdiction in which such offer or solicitation is not authorised or in which a member of the Rathbone Group is not authorised to do so.

I confirm that I am an investment intermediary authorised and regulated by the Financial Conduct Authority. I have read and understood the legal information and risk warnings below:

Important Information (Terms and Conditions)

The information contained on this site is believed to be accurate at the date of publication but no warranty of accuracy is given and the information is subject to change without notice. Any opinions or estimates included herein constitute a judgement as of the date of publication and are subject to change without notice. Furthermore, no responsibility is accepted for the accuracy of any information contained within sites provided by third parties that may have links to or from our pages.

Rathbone Investment Management Limited ("RIM") is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered Office: Port of Liverpool Building, Pier Head, Liverpool L3 1NW. Registered in England No 01448919.

In accordance with regulations, all electronic communications and telephone calls between Rathbones and its clients are recorded and stored for a minimum period of six months.

The information provided in this site is directed at UK investors only. It does not constitute an offer to sell, or solicit an offer to purchase any investments by anyone in any jurisdiction in which such offer or solicitation is not authorised or in which a member of the Rathbone Group is not authorised to do so.

In particular, the information herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in France and the United States of America to or for the benefit of United States persons (being resident in the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof).

In order to comply with money laundering and other regulations, additional documentation for identification purposes may be required.

Rathbones shall have no liability for any data transmission errors such as data loss, damage or alteration of any kind including, but not limited to, any direct, indirect or consequential damage arising out of the use of services provided or referred to in this website.

Past performance should not be seen as an indication of future performance.

The value of investments and the income from them can fall as well as rise and you may not get back the amount originally invested, particularly if your client does not continue with the investment over the longer term.

Changes in the rate of exchange between currencies may cause the value of an investment to go up or down.

Interest rate fluctuations are likely to affect the capital value of investments within bond funds. When long term interest rates rise the capital value of units is likely to fall and vice versa. The effect will be more apparent on funds that invest significantly in long dated securities. The value of capital and income will fluctuate as interest rates and credit ratings of the issuing companies change.

Tax levels and reliefs are those currently applicable and may change and the value of any tax advantage will depend on individual circumstances.

Investing in emerging markets or small companies may be potentially volatile, as these investments are high risk.

The design, text and images are owned, except as expressly stated by members of the Rathbone Group. They may not be copied, transmitted, displayed, performed, distributed, licensed, altered, framed, stored or otherwise used in whole or in part or in any manner without the written consent of Rathbones except to the extent permitted and under the procedures specified in the copyright Designs and Patents Act 1988, as amended and then only with notices of Rathbones' rights.

Subscribe to the In the KNOW blog email