2020 US Election

Hue Frame

Frame Funds Management

With the United States Election just around the corner, investors around the world are weighing up the economic pros and cons of each candidate.

National polling has Joe Biden up 7 -10 points, however this does not tell the whole story. Given the Electoral College system, national numbers do not matter as much as those in key “swing” states. Since 1960, the victor has always won a majority of Florida (Biden +2.2%*); Pennsylvania (Biden +5.6%*); Ohio (Biden +0.4%*); Michigan (Biden +7.1%*); North Carolina (Biden +1.4%*). While Biden has reasonable leads in all these States, the incumbent President Trump is still far from out of the race (considering tracking error and how these numbers will swing over the next month).

With that in mind, this article outlines the economic plans of each candidate and how they may impact financial markets.

Candidate: Biden/Harris

  • On COVID-19 policy, Biden has suggested emergency paid leave for sick or short-term contract workers, covering 100% of weekly salaries up to $1400 a week. He has also pushed for relief or forbearance of federal student loans and federally backed mortgages. Interest free loans to COVID-19 affected small businesses is also on his agenda.
  • On taxes, Biden has said he would increase taxes on those earning $400,000 or more while keeping the Trump tax cuts for everyone else. He suggests restoring the top tax bracket to 39.6% from 36% (for individuals earning more than $518,400). The corporate tax rate would also be raised from 21% to 28% under a Biden Presidency, compared to the 14% cut Trump delivered in 2017.
  • On housing, Biden has touted $640 billion over the next 10 years for housing, including a $100 billion affordable housing fund. Biden also wants to offer rental assistance to those earning less than 50% of the median income in the area. His plan would cap their rental spending at 30% of income.
  • On minorities, Biden is looking to spend money in minority communities, pledging $50 billion to start-up businesses run by entrepreneurs of colour, as well as $100 billion in low interest loans to minority communities.
  • On climate change, Biden has stated this as a massive area of investment if elected. He has promised $2 trillion over the next decade, which will include investment in clean energy, construction of sustainable housing and updating existing housing to improve energy efficiency. A large part of his climate change expenditure is focused on the transition to electric transportation, both public and private.

Candidate: Trump/Pence

So far, the Trump campaign has failed to release specific policies they plan to enact if re-elected. However, what we do know is the following:
  • On COVID-19 policy, Trump has expressed support for a $1.5 trillion plan that would continue COVID-19 relief. It includes more aid to small businesses and a continuation of additional unemployment benefits.
  • On taxes, Trump has proposed further tax cuts. While an exact policy is yet to be laid out, it has been suggested that middle income earners will see a tax cut or a restructuring of tax brackets. At present, it is still unclear whether tax cuts made in 2017 will be made permanent or will be phased out in 2025 as currently planned. President Trump has also talked about reducing taxes on capital gains.

So, what does this mean for the economy, particularly US equity markets?

Biden’s policy on renewables should see electric vehicle manufacturers flourish. With Tesla, Inc (TSLA) posting its fourth straight quarterly profit, we would expect to see a continuation of this success if Biden was elected. General Motors (GM), who are promising 20 new electric vehicles by 2023, could also see a boost. It is therefore likely battery metal explorers and producers will see increased money flow with increased battery demand and support. Increased infrastructure investment under a Biden Presidency should also see a boost to the construction sector. Key construction materials (iron ore, steel, copper etc) should also see similar money flow as demand rises in line with infrastructure spending. While an increased corporate tax rate could work to offset some of the gains seen from stimulus, the enormity of the stimulus plans from Biden and Harris (especially in the renewable energy market) should provide a boost to financial markets.

Trump’s policies, although lacking detail at this stage are expected to be much of the same as last term. This means that its good news for corporations with further company tax cuts on the cards, possible middle-income tax cuts and possible capital gain tax cuts. Trump’s plans should also provide a positive impact on financial markets.


Both candidates seem to be in favour of another round of stimulus and an extension of benefit payments to soften the economic impact of COVID-19. If Congress passes further stimulus, we should expect to see investor confidence continue to return and equity markets benefit. We may also see another wave of retail money enter the share market as household disposable income rises (the Council of Economic Advisors (CEA) August report noted disposable income has increased 5.4 per cent since February).


Further stimulus looks likely. It appears to be one of the few things the two candidates agree on. Battery metal miners and producers, as well as electric vehicle manufacturers will be ones to watch if the polls begin widening in Biden’s favour. With one more debate to come and the usual pre-election bombshells moments away, volatility is expected to continue in financial markets until after the election. COVID-19 news, how the economic recovery is progressing, US election developments and delays to further stimulus plans are all other factors which will provide two way volatility.

*As at 1st October 2020.

Not already a Livewire member?

Sign up today to get free access to investment ideas and strategies from Australia’s leading investors.

This information is prepared by Frame Funds Management Pty Ltd (ACN 608 862 442) (Frame Funds, we or us) is a Corporate Authorised Representative (CAR No. 123 9068) of Primary Securities Limited (ACN 089 812 812 635) and is intended only for "wholesale clients" within the meaning of sections 761G and 761GA of the Corporations Act 2001 (Cth). This material is not intended to constitute advertising or advice (including legal, tax or investment advice) of any kind. These materials are not to be distributed to any person who does not qualify as a wholesale client and must not be copied, reproduced, published, disclosed or passed to any other person at any time without the prior written consent of Frame Funds. Primary Securities Ltd (ACN 089 812 635 635, AFSL 224 107) is the Trustee of, and issuer of units in, the Frame Futures Fund (Fund). In deciding whether to acquire, or to continue to hold, units in the Fund please read the current Information Memorandum available from Frame Funds. Past performance of the Fund is not a reliable indicator of future performance. The value of an investment in the Fund may rise or fall. Returns are not guaranteed by any person. Total returns are calculated before tax and after ongoing management costs. In preparing this information, we have not considered your investment objectives, financial situation or personal circumstances and therefore the Fund may not be suitable for you. Neither Frame Funds, Primary Securities Ltd, nor any of their respective related parties, directors or employees, make any representation or warranty as to the accuracy, completeness, reasonableness or reliability of the information contained in this publication or accept liability or responsibility for any losses, whether direct, indirect or consequential, relating to, or arising from, the use or reliance on any part of this material. Any rates of return, forecasts or estimates contained in this publication are not guaranteed. The content of this publication is current as at the date of its publication and is subject to change at any time. It does not reflect any events or changes in circumstances occurring after the date of publication.

Hue Frame
Frame Funds Management

Hue Frame is the founder of Frame Funds Management. Frame Funds is a quantitative funds management company, that manages assets for institutional and wholesale clients, and proprietary funds.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Sign In or Join Free to comment