Priorities along Party Lines
The Democrats and Republicans have very different priorities right now, some of which are in direct contradiction of one another. However, there is one area on which both parties are in perfect agreement. How will this impact investors?​
Both Parties Favor Deficit Spending​​​​​​

  • There is growing consensus in both parties that fiscal stimulus, either through lower taxes or higher spending, which results in larger deficits, is acceptable and even desirable.

  • This may benefit the entire stock market more than many people realize. Historically, budget deficits have helped lift stocks. Higher government spending and/or lower taxes have historically meant higher GDP, which boosted corporate sales and profits. According to data from Strategas, average S&P 500 performance in large deficits has been 17.9% compared to only 9.9% in small deficit or surplus years.

  • This shared interest in deficit spending may help support the stock market regardless of which candidate wins the November election.

The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of October 2020. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

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S&P 500®: An index of large company stocks considered to be representative of the U.S. stock market.​

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