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The uncertainty of the U.S. presidential election outcome is causing unease, but the closeness of the race highlights some issues that will be significant going forward.
Morningstar's Aron Szapiro, head of policy research; Preston Caldwell, head of U.S. economics research; and Dave Sekera, chief U.S. market strategist, discussed the implications of these topics at length Wednesday.
1. Don't expect big policy changes no matter who wins the Senate.
The Democrats were hoping to take over a majority in the Senate, which looks unlikely now. In fact, even if they still won the chamber, the majority would be so small, big changes couldn't be made, says Szapiro.
"What we really all want to keep an eye on is the fate of stimulus and the lame duck, what the majority of senators want to do there. Again, we'll get more clarity as we have final election results for both the Senate races and the presidential race," he said.
2. A big stimulus is doubtful with a GOP Senate.
Pundits have stated that a "blue sweep" of the presidency and Congress would be good for a new stimulus package, however, the potential of a Biden presidency with a GOP senate doesn't bode well for a large stimulus package, says Caldwell.
"We thought that if either Trump won or if Biden won along with a Democratic Senate, the chances of another massive stimulus in 2021 were quite good," he said.
"By contrast, the prospects for stimulus in a Biden win/GOP Senate outcome look poor. Recent historical experience suggests that a Democratic president paired with a GOP Congress is likely to result in gridlock as well as stringency on the deficit," he explained.
