GreenStar Newsletter Excerpt – November 2020
So that happened. The world still spins and the star-spangled banner still waves. It’s fair to say that the election was a success for the following reasons:
- Nobody is 100% happy – which is what should happen in a democracy.
- It had the highest voter participation rate in over 100 years.
With the count still ongoing, we hope to eventually add that it was a peaceful election to this list. Earlier this week, we saw businesses preemptively boarding up their windows and cities putting up looting barriers. There were others who feared militia groups and voter intimidation. While there have been some inappropriate behavior, thus far America has come out on the other side intact.
While ballots are still being counted, it seems likely that Joe Biden has won, Democrats maintained control of Congress, and Republicans control of the Senate. With a 6-3 conservative/liberal Supreme Court split, one could optimistically hope that our leaders will choose to work together, rather than the parties living election-to-election pining for full control before legislating.
Before he was President, Abraham Lincoln spoke to the Illinois legislature, “If we could first know where we are, and whither we are tending, we could then better judge what to do, and how to do it.” This was part of his famous “A House Divided” speech which can be found here.
People often say to us, “When X Party is in power, it’s terrible for the economy.” Our view is that there is way too much credit (and blame) that goes to the President for economic and stock market performance. There’s a lot of luck to it along with the many moving parts of business and economy. The President certainly has a great deal of influence over policies which do move the economic needle. However, our observation is that good businesses figure out how to make money, regardless of the political climate.
Leading into the election, the stock market was expecting a fairly volatile environment. Since the polls closed, particularly as we near the final results, the stock market has been going up robustly. We interpret this not so a commentary on the results, but as a celebration of the absence of uncertainty.
Right now there are legitimate worries about the current surge in the pandemic, lock-downs in Europe, and safer-at-home orders here in the United States. This continues to be the biggest challenge in the global economy. While we hope for a near term vaccine, we’ve learned to live with the pandemic and shown that the economy can go on without one.
However, the pandemic will continue to be a stumbling point in the economy. Just this morning, Jerome Powell of the Federal Reserve cited “considerable risks” ahead in the economy and restated that they will likely be keeping rates near 0% “at least” through 2023.