Yet behind the shambolic façade of the two main presidential candidates – a political Morton’s Fork if ever there was one – this is an election that matters perhaps more than any other in recent history. Covid-19 has revealed major structural weaknesses in the US economy, and proved a powerful catalyst for the social division and civil unrest that has been bubbling beneath the surface for some time. Convincing an angry electorate that they can repair such significant damage is a challenge that few presidential candidates have ever faced.
Covid-19 has also revealed just how powerful the country’s technology industry has become, not just as a force to drive markets higher but as one that has a firm grip on both the economic and social direction of the country. Concerns over the extent of Silicon Valley’s influence have been growing for some time, and tech firms have frequently found themselves in front of senate hearings. Until now, though, these have done little to divert them from their growth trajectories, and big tech has just got bigger and bigger, to the point that it has, many argue, become too big to do anything about.
That may be true – what leader would wilfully destroy their biggest industries, after all? But with the conclusion of a 16-month bipartisan inquiry into the sector by the House of Representatives it now looks almost certain to become a key issue as Americans head to the polls. And with many powerful Democratic voices pressuring for a more combative approach to tech companies seen to be abusing their might, a Joe Biden victory could mean big trouble for the sector’s giants – even break-up.
Investors may not be as safe as they think even in the event of a Republican victory, either. While they may not favour the punitive antitrust approach of some Democrats, issues of privacy and bias are hot topics among Republican lawmakers – think fake news and the censorship of Trump’s social media outpourings, and you can understand why. And, as Apple is discovering, alleged monopolistic behaviour may become an issue for the courts rather than Capitol Hill. That means whatever the outcome of the election, investors should be thinking about their exposures to the US – after a strong run, many portfolios may be somewhat tech heavy. The risks that go with that are too big to be ignored.
