Their first paragraph can lead one astray. As noted in the October 21 pre-market post "Solar Speculators May Have Dissapointment and Sorrow Coming Their Way (TAN)":
No matter who wins the election it will be difficult to match the expectations embedded in the price action of the Invesco Solar ETF (TAN):
Although we were able to catch the exact bottom for the S&P 500 futures—posted Friday evening March 20, 2020—we sure as heck didn't foresee the latest bend in the rate of ascent in this little vehicle (via FinViz):
Not to say the ETF won't trade higher, just that we've crossed the event horizon from sales and earnings and cash flow investing to greater fool speculating.
$77.73 at the close Tuesday Oct. 20.
I was later asked what my opinion would be if Ra, the Egyptian Sun God, was running for U.S. president.
Smart ass.
From the BlackRock blog. first up, November 2:
Polls are suggesting a greater likelihood of a Democratic sweep in this week’s U.S. election. We are starting to incorporate themes we believe would outperform in that event, moving toward a more pro-risk stance overall despite last week’s market pullback. We debut an overweight in the U.S. size style factor, and upgrade broad emerging market (EM) and Asia ex-Japan equities to overweight.
Large-cap technology stocks have driven U.S. equity market performance this year. We believe a repeat is unlikely in 2021, and see potential for smaller companies to outperform, especially in the case of a Democratic sweep that would result in significant fiscal stimulus. This electoral outcome also would likely lead to a new global minimum tax and more strenuous anti-trust review – which could weigh on large-cap tech and pharmaceutical companies. A boost in infrastructure spending could lend support to companies in industrials and materials – many of them small in size. We introduce an overweight in the size style factor in the U.S. market to capture our preference for smaller, high-growth companies. The chart above illustrates what underpins our view: The MSCI USA Low Size Index has a much higher share of industrials – and much lower exposure to information technology and communication services – than the parent MSCI USA Index. Meanwhile we downgrade minimum volatility to underweight, as we expect a cyclical upswing over the next six to 12 months – an environment where min vol typically lags in performance. This comes as U.S. earnings reports for the third quarter have beaten expectations.
We are also updating some of our regional equity market views. This includes upgrading broad EM equities to overweight. Positive spillovers to global growth from increased fiscal stimulus, more predictable U.S. trade and foreign policy and the prospect of a weaker dollar amid negative U.S. real rates in the event of a Democratic sweep would all bode well for EM assets, we believe. We also downgrade Japanese equities to underweight. That said, we are not outright negative on this market. We just expect Japanese stocks to benefit less than other Asian markets and EM in general from a recovery in global trade: A weaker dollar could send the Japanese yen up, putting pressure on the country’s export sector.
The evolving virus dynamics are another key factor. We are upgrading Asia ex-Japan equities and Asia fixed income to overweight, as China and other Asian economies have done a better job of containing Covid – and are further ahead in the economic restart. We expect this dynamic to continue over the months ahead. We are downgrading European equities to neutral. A resurgence in Covid cases has triggered lockdowns on local and national levels – albeit with more flexibility than earlier in the year – just as the economic restart shows signs of weakness. The renewed restrictions are already putting pressure on activity in the region. We still like euro area peripheral bonds due to the European Central Bank’s easing stance.
The bottom line: We are taking another step toward a pro-risk stance despite last week’s market pullback and the uncertainties just ahead. This follows our tactical move last week to downgrade U.S. Treasuries and upgrade their inflation-linked peers on a growing likelihood of significant fiscal expansion. A Democratic sweep outcome in the election would tip us to a more pro-risk stance overall, strengthening our conviction that a cyclical upswing will benefit risk assets over a 6-12 month horizon....
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If you insist on making election-related bets, keep it simple and make it large enough to matter:
Action: "Susquehanna Will Take Your Election Bets, Up to $100 Million"
