Goldman Sachs scenario on a 'blue wave' election win - mixed implications for equities

Author: Eamonn Sheridan | Category: News

'Blue wave' of course refers to a Biden win and the Senate changing hands.

Our market views remain broadly procyclical, consistent with our above-consensus global growth forecast. While a blue wave would have mixed implications for broad US equity indices

GS see a negative in the form of:
  •  a sizable increase in the corporate income tax rate by up to 7 percentage points
But positives as:
  • would likely result in substantially easier US fiscal policy
  • a reduced risk of renewed trade escalation
  • and a firmer global growth outlook
More:
  • These shifts should be clearly positive for cyclical sectors, as well as firms that pay most of their taxes outside the United States. In addition, we would expect a material backup in longer-term sovereign bond yields as well as support for our standing forecasts of higher commodity prices and a weaker US dollar. 
(bolding mine).


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