View the presentation: Weighing the Impacts of a Potential Watershed Election

View the presentation

by Paul Christopher, CFA, Head of Global Market Strategy and Gary Schlossberg, Market Strategist

Key takeaways

  • We expect that the presidential and Senate races will be closely contested and decided, by voter reaction to the president’s handling of nationwide protests in May and June, and by how well the U.S. economy’s reopening is managed.
  • Based on current polls, we view the most likely outcome as a divided federal government, which should moderate, or even block, the most ambitious policy initiatives of any president. We believe that the main alternative scenario is single-party government leadership, led by the Democrats.
  • Fast-changing economic dynamics and the unusual nature of this economic cycle lead us to conclude that it is premature for investors to change portfolio allocations based only on projected election outcomes. We prefer to maintain our current tactical allocations.

Risk considerations

Each asset class has its own risk and return characteristics. The level of risk associated with a particular investment or asset class generally correlates with the level of return the investment or asset class might achieve. Stock markets, especially foreign markets, are volatile. Stock values may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors.

General disclosures

Global Investment Strategy (GIS) is a division of Wells Fargo Investment Institute, Inc. (WFII). WFII is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.

The information in this report was prepared Global Investment Strategy. Opinions represent GIS’ opinion as of the date of this report and are for general informational purposes only and are not intended to predict or guarantee the future performance of any individual security, market sector, or the markets generally. GIS does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report.

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation; an offer to participate in any investment; or a recommendation to buy, hold, or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs, and investment time horizon.

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