November 3 is Election Day in the United States. What could that mean for the markets? You're not supposed to fight the Fed, and the Fed is expected to keep interest rates low. However, there are a lot of forces pushing on this market, and I expect stocks to be lower in 2021. Let's take a look at some different scenarios and how the market might react... 1. Chaos: One or both candidates declare victory while both refuse to concede. Results take weeks to become official. I think this is the most likely outcome, and it is what the market already expects. The natural assumption is that the markets would be in free fall. But a chaotic result is very likely priced into the market. Right now, the only thing the market seems to care about is low interest rates. Should this scenario happen, I don't expect the market to stop grinding its way higher. Perhaps there would be some sharp moves here and there, maybe a fake head lower or two... If President Trump loses and refuses to vacate his office in 2021 (which I think is unlikely), the U.S. will face a real constitutional crisis, which would likely lead to violence in the streets. It's hard to imagine stocks going up under that scenario. 2. President Trump is reelected. The market is up 52% since President Trump's inauguration. That's the fifth-best market performance in the first 46 months of a presidency going back to Herbert Hoover. The market clearly likes what's been going on, as it has gone nearly straight up except for a pause between October 2018 and June 2019 (and, of course, when the pandemic began). I'd expect the market to initially shoot higher, especially if the Democrats were to take control of the Senate. The market likes gridlock - the less politicians can do, the better. If Republicans hang on to the Senate, then the status quo is maintained and the market will probably continue its upward path. But quickly after, I'd expect a "sell the news" reaction. The market tends to do the opposite of what most people think, and most people think a Trump reelection will be positive for the market. So look for a quick sell-off after the Trump reelection rally. Going forward, Senate Republicans have shown an unwillingness to sink the country further into debt with a giant stimulus package (though that's kind of like saying they refuse to add water to the pool when it's already overflowing). Despite a rebound from the worst quarter in history, the economy is still terrible. Ten million people file continuous unemployment claims each week. Additionally, nearly 1 million new claims are filed each week. Without a large stimulus, it's hard to imagine the economy regaining its legs anytime soon since a vaccine won't be available to the masses until spring at the absolute earliest. That realization should lead to lower stock prices in 2021. | 
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