Independent Strategy

Dodging icebergs

A Biden presidency wouldn’t exactly light up markets, but neither would it cause collapse. His election would still have some significant implications. He would spend money on things that need money spent on them: US infrastructure, the green economy and education. All could be long-term contributors to (woeful) US productivity. The equity market might like such pro-growth spending. However it would place upward pressure on longer-term Treasury yields. Biden would also lead to some temporary abatement in US/China tensions. The cold war is here to stay but its tempo, predictability and language will change. Alongside a broadly weak US dollar, this should drive renminbi appreciation. This story is also positive for Chinese tech stocks, but the software rather than hardware side of this business.

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