The Presidential Race that Has Stopped the Nation — Policy and Markets

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In today’s Money Morning…the market aftermath…warming up to the green…whether it’s Trump or Biden — the market will offer up plenty of investing opportunities…and more…

The Melbourne Cup has been outdone!

Stateside, the US election is serving up the real neck-and-neck finish. One that is visibly dividing a nation, calling into question democracy, and a whole lot tighter than pollsters thought.

This isn’t the Biden landslide that many in the mainstream expected.

Quite the opposite actually.

Trump is technically ahead in most of the states still not called. Meaning that he really is in the box seat to dish up another ‘upset’ and secure four more years.

Despite that though, most outlets are tipping a Biden win still. Albeit a very narrow one, relying on the trickle in of the last mail-in ballots. A matter that has become a very hot topic.

The president has long foreshadowed his attack on mail-in ballots, but last night it finally came to a head. Trump vowed to take the matter to the Supreme Court. A move that makes me believe this is an election that is going to drag on a lot longer than people anticipate.

Don’t be surprised if we see an affair similar to that of the 2000 US election. A vote that was only resolved after a recount and Supreme Court ruling.

Either way, don’t expect a definitive result for at least a couple of days. And even then, expect the unexpected; because this election has truly stopped the nation.

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The stock market aftermath

Now, I don’t want to delve too much deeper than that into US politics. Because while it is a pivotal macroeconomic factor, it is markets that we care about the most.

And boy has it been a wild ride for Wall Street in the past 24 hours.

The S&P 500 closed 2.3% higher, while the NASDAQ finished 3.9% higher. With the latter bolstered by strong gains from the tech sector. Including big gains from Facebook (up 8.3%), Amazon (up 6.3%), and Alphabet (up 6.1%).

It would seem that markets are preparing for a weak Biden win. One that may see the Democrats unable to overturn Trump’s tax cuts, and unable to police the big tech companies.

Suffice to say, it was a standout session for US equities across the board.

But for one sector in particular, election night was a huge success.

See, many US states weren’t just voting for their next president. They were also voting on a raft of ballot measures that could become legislation. For example, Louisiana has voted in favour of banning abortion.

It is these state-wide changes that have become far more fascinating from perspective. Especially when it comes to illegal drugs…

As you may or may not know, cannabis is policed very differently across the US. Some states forbid any possession or use of the drug, while others have decriminalised it, and some have even legalised it.

My point is, depending on which state you go to, the stance on cannabis can have dramatic changes.

However, these stances are constantly changing, and election night proved that once more.

Warming up to the green

Both Arizona and New Jersey voted in favour of legalising any and all use of cannabis last night. Bringing them in line with several other states that have made the drug legal for adult use.

That’s a big result for US pot stocks. Especially as any hopes of Biden mandating a nationwide legalisation are looking extremely unlikely now.

But this wasn’t the biggest win for cannabis from last night. No, in my view, the real victory came from voters in South Dakota and Mississippi. Two states that have long been Republican strongholds.

Both have now legalised medicinal use of cannabis. With South Dakota looking close to legalising recreational use as well!

In other words, this demonised drug is starting to win over staunch conservative states. Something that I didn’t expect to see in 2020 but is big news for the industry.

For that reason, I’d be keeping an eye on the how pot stocks track.

Beyond this though, there was one vote that was even more remarkable.

As of last night, with 55.8% of voters in favour of the measure, Oregon looks likely to become the first US state to legalise psilocybin. Or, as they’re more commonly referred to: magic mushrooms.

This is a huge win for the budding psychedelic industry. An industry that has attracted a whole lot of investor interest recently. I’ve talked about that, right here.

Now though, it’s not just investors that are seeing the potential benefits for psychedelics, but everyday people too. With Oregon set to lead the way with this new legislation.

And let me be clear, this isn’t about letting people chase a high. No, this change is simply to ensure that magic mushrooms can be used legally and properly in supervised settings. A treatment that is showing extremely promising signs of tackling major mental health illnesses.

For this reason, I suspect we may be on the cusp of a psychedelic stock boom. A trend that may bear many similarities to the pot stock boom a few years ago, which net early investors some ridiculous gains.

So, don’t let the politics fool you. Because whether it’s Trump or Biden — the market will offer up plenty of investing opportunities.


Ryan Clarkson-Ledward Signature

Ryan Clarkson-Ledward,
Editor, Money Morning

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About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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