Economy

Democrats will not win a full sweep and implement drastic new tax hikes. However, our quant model still favors them to win the White House and just upgraded their odds. While we expect equity volatility around the election, investors do not need to worry about corporate tax hikes.

Our annual end-of-summer chartbook report traces the labor market deterioration that led us to downgrade equities at the beginning of August. It also highlights the soft-landing expectations that the credit and equity markets are discounting. We like the risk-reward profile of our newly defensive stance.

MacroQuant continues to recommend underweighting equities and overweighting bonds. This is consistent with the Global Investment Strategy Team's decision to downgrade global equities to underweight in late June.

This Insight looks at potential dollar moves in the next six-to-twelve months.