Our Hot Take on the Election

Trump won, and the Republicans took Senate control, as we predicted. The election was close, but not razor-close as we had expected and feared. The presidential election is settled, but five Senate races are still possibly subject to dispute. Headline risk still ahead is Trump’s New York sentencing on November 26, which could potentially see him jailed. Biden and Trump should reciprocally pardon each other. State-level polls, prediction markets, evidence of strong GOP early voting and the Fair model proved to be the best predictors of the election. Stocks, rates, yields, and TIPS breakevens are higher in the aftermath, and oil prices are lower. Small cap stocks and financials are outperforming, as we predicted. This is all simply indicative of faster growth – not market-implied fears that Trump will bust the budget, ignite inflation with tariffs or corrupt the Fed.