Page 11 - ISQ January 2021

JANUARY 2021

2021 Washington Outlook: The Impact of

the Biden Administration on the Market

Ed Mills, Managing Director, Washington Policy Analyst, Equity Research

Democrats are in position to control the White House,
Senate (pending final vote certification as of this writing), In the near term, policy uncertainty may elevate
and the House of Representatives, completing a Demo- volatility, but heightened expectations in the longer
cratic sweep and ushering in a new set of priorities, bound term of recovery-supporting measures and an increase
in federal spending will continue to support positive
to have an impact on both the economy and market. The market sentiment.
policy outlook for the next year, while dominated by the
COVID-19 response, will also look to advance a Biden tioned sectors. Technology, on greater antitrust regulations and tax
administration’s economic priorities in the areas of energy changes, could see weakness, but we believe the sector remains
and the environment, manufacturing, trade, and consumer well positioned for the future in a unified Democratic government.
protections with the associated market impact. The very BIDEN WITH A DEMOCRATIC CONGRESS:
thin Democratic majority margins in the House and Senate THE FIRST 100 DAYS AND BEYOND
will effectively moderate the direction of policy changes, With a 50-50 tie in the Senate, control of the chamber goes to the
but Democrats do have tools to enact impactful policies in party of the vice president, which will be Kamala Harris, making a
the areas of taxation and spending. 50-50 Senate a Democratic majority. Senator Chuck Schumer (D-NY)
would serve as Senate Majority Leader and would be in control
In the near term, policy uncertainty may elevate volatility, but over which bills and nominees receive a vote in the Senate. The
heightened expectations in the longer term of recovery-supporting Democratic agenda will lead with additional fiscal stimulus and the
measures and an increase in federal spending will continue to sup- confirmation of key Biden appointees. Later this year we expect a
port positive market sentiment. Thematically, we could see budget reconciliation bill to pass and include tax changes. The key
Consumer Discretionary and Financials be two of the best posi- debate we have observed is a belief that Dems may transition any

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