Phil Orlando: I'm Phil Orlando, Chief Equity Strategist. And this is a Washington and Wall Street Update from Federated Hermes. In a refreshing return to normalcy, last night's Vice Presidential debate was much more respectful, substantive, and informative than last week's first presidential debate. Moderator Susan Page from USA Today did a much better job this week of keeping order. Some policy highlights.
The American economy is on the ballot. While we're in a deep recession, President Trump has helped to orchestrate a sharp V bottom recovery since the economy's April trough. We're estimating third quarter GDP will rise by more than 23 percent, which would be the strongest economy in history. That number will be flashed on October 29th, less than a week before the election. But if Senator Harris raises taxes by three to 4 trillion dollars, Vice President Pence pointed out that that could imperil the economic recovery. On energy policy, Senator Harris said that she will not ban fracking, but Pence pointed out that banning fracking is on Vice President Biden's website as a central part of their Green New Deal plan.
The Supreme Court is on the ballot. With the untimely death of Justice Ginsburg, it's important to get SCOTUS back to full strength ahead of what may be a contested election to rule on whatever issues may arise. Pence said that Judge Amy Coney Barrett is an outstanding judge and he hopes that the Senate will review her credentials on the merit. Importantly, for the second consecutive week Senator Harris refused to answer whether she will pack the court in retaliation if Judge Barrett is confirmed. SCOTUS has had nine seats for 150 years. Finally, China is on the ballot. Senator Harris accused President Trump of losing the trade war. But Pence pointed out that half of the United States 600 billion dollar balance of trade deficit is related to China. Biden did nothing to address it during his eight years in the Obama administration. Focus groups last night felt that Pence won the debate on substance which sets the table for the presidential town hall debate in Miami on October 15th.
Disclosure: Views are as of October 8, 2020 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Federated Advisory Services Company 20-30467 (10/20)