I believe the markets are telling us that Donald Trump will win a second term in office.

Let me be clear… nothing I’m writing here is meant to be political commentary. I’m not saying I am pro-Trump, nor am I saying I’m pro-Biden. I’m simply outlining what the markets tell me based on my own framework for discounting the future.

And right now, the markets are telling me Trump wins in a landslide.

Why?

Because tech stocks continue to rally, rather than crash.

Let me explain.

Tech Stocks Telling Behavior

Joe Biden has made it very clear that if elected, he would end the Trump Tax Cuts.

Now, the election is November 3rd, 2020. However, if he won the Presidency Joe Biden would not actually be sworn into office until January 20, 2021 (or so).

Put another way, if elected, Biden would not actually be able to end the Trump Tax cuts until sometime in late January / early February 2021.

Which means every hedge fund manager, mutual fund manager, and professional trader would have a small window of time to lock in his or her gains prior to the Trump Tax Cuts ending and a higher rate of taxation hitting their market profits.

What do you think those people who manage tens, if not hundreds of billions of dollars’ worth of assets would do with their profits during that time?

The answer is obvious: they would sell their winners in 2020 to lock in the gains at a lower tax rate.

And where have the largest profits in stocks occurred during the Trump years?

The chart below comparing the tech-based NASDAQ (red line) and the S&P 500 (black line) says it all.

Remember, stocks are a discounting mechanism. We are now a mere two weeks away from the election. So, the market is anticipating the outcome already.

And what are tech stocks doing?

They’re rallying hard, approaching new all-time highs.

If the market thought Joe Biden was going to win, we’d be seeing stocks, particularly tech stocks, struggle to move higher. They’re not. They’re ripping higher. Which tells me that the markets believe higher taxes AREN’T coming, and investors want to buy — NOT sell — right now.

Best Regards,

Graham Summers
Editor, Money & Crisis