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The stock market's initial reaction to the US election won't hide problems

It looks as if Joe Biden will be president but will the stock market's relaxed first response continue?
The stock market's initial reaction to the US election won't hide problems

The prospect of a Biden presidency was assumed to scare investors as taxes on company profits and personal incomes were expected to rise. The buoyant stock market on Wednesday and Thursday this week reflected the view that although Biden may end up in the White House, the Republicans are still expected to control the Senate.

What this means is that Biden will not be able to do that much and certainly won’t be able to pursue a radical tax raising and antitrust agenda. The reaction of the US stock market has been akin to a bunch of teenagers being told that the grown-ups won’t be back tonight after all and that the party can carry on in full swing.

This does nothing to change my view that this market is somewhat false and is propped up by cheap money, expensive valuations of tech stocks and not much else. The problems facing the US and UK economies are very serious, and I do not believe that they can be solved with printing money.

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