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What happens next
What we know, as of now, is that the election is very close and could go in a number of directions. The races for the White House and Congress are far from settled, with key states like Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin too close to call. It could take days for the full picture to become clear — and in the meantime the uncertainty itself could become a source of risk.
But there are three things we can say with some certainty:
1. No “blue wave,” no major stimulus
A scenario in which Joe Biden becomes president, Democrats claim the Senate and keep control of the House is now considered unlikely. Some investors had been pricing in a so-called blue wave, on the assumption that it would lead to a major stimulus package. If Congress remains divided, most likely with a Republican Senate and Democratic House, then — regardless of who is president — the prospects for a big spending plan to bolster the pandemic-hit economy are reduced. As Holger Schmieding of Berenberg Bank put it in a research note today, the smallest expected stimulus would come if a President Biden had to work with a Republican Senate.
“A divided government does not mean we won’t have a fiscal stimulus package,” said Tom McLoughlin, the head of Americas fixed income at UBS Global Wealth Management. “But it will be a shadow of what might have happened.”
2. Markets are seeking safety
At a news conference at the White House after 2 a.m. Eastern, President Trump falsely declared that he had already won re-election, with millions of ballots left to be counted. He said he would go to the Supreme Court to stop further counting. The Biden campaign called the president’s remarks “outrageous, unprecedented, and incorrect,” and TV networks roundly criticized the baseless claims.
A drawn-out count that gets contested in courts is analysts’ nightmare scenario, while the tight margins of the vote — and the prospect of legal wrangling — are roiling markets. “At this point, we’ve got a couple days’ good grace with the market — but we need a winner fairly soon or it’s going to upset the apple cart,” said Ryan Detrick, the chief market strategist at LPL Financial.
Plunging bond yields suggest a flight to safety (and a lack of confidence in deficit-boosting stimulus spending) while seesawing stocks reveal widespread anxiety. S&P 500 futures moved between gains and losses nearly 10 times in the 12 hours leading to 6 a.m. Eastern. And in a sign of the times, shares of tech giants like Amazon, Apple and Microsoft are among the biggest gainers in premarket trading, serving as havens for investors looking for a place to park their money. (Divided government also “lowers some of the chances for those antitrust concerns we had with big-cap tech literally two days ago,” Mr. Detrick added.)
3. Companies face engaged but divided employees, customers and stakeholders
Whatever the election’s outcome, it’s clear that the country is more politically engaged than it has been in a while. Turnout is historically high, with early voting in several states exceeding 2016 totals. But ticket-splitting appears to be a thing of the past, with voters opting for candidates strictly along party lines. For companies that increasingly take on political and social issues in addition to seeking profits, this is a double-edged sword.
“The genie is out of the bottle” on corporate civic participation, said Susan McPherson, founder of McPherson Strategies, describing herself as “thrilled” with the turnout. But it won’t be easy to make everyone happy in such a hyperpartisan atmosphere, said Bryan Sanchez of Lionstone Investments: “My hope is that this is a low point in our country’s unity and that we can rebuild from here whatever happens.”
For all the latest election news, follow our live updates, forecasts and rundown of the results so far.
HERE’S WHAT (ELSE) IS HAPPENING
A clearer picture of immunity to Covid-19 is emerging. A new study conducted in Britain found that cellular immunity to the coronavirus is likely to be present at least six months after infection. That suggests people may be able to fight off the virus even after antibodies fade. (The study has yet to be peer-reviewed.)
A top strategist at JPMorgan Chase accuses his colleagues of political bias. In an internal chat, Marko Kolanovic, the bank’s global head of macro quantitative and derivatives strategy, said the banks analysts based forecasts on “party preference” and called it a “joke.” The trading floor fell silent after his remarks, Bloomberg reported.
BMW’s profit surges on huge demand in China. The carmaker said its third-quarter earnings rose nearly 10 percent, thanks largely to a 31 percent jump in Chinese sales, which helped offset a 16 percent slump in U.S. sales.
Uber wins its election
American voters faced more than 100 initiatives on a dizzying array of issues on ballots across the country. The most expensive — and perhaps most significant — proposal was in California, where gig-economy companies like Uber, Lyft and DoorDash spent $200 million to defeat efforts to classify their drivers as employees instead of contractors.
That could reshape efforts to regulate labor in the digital economy. The victory for Big Tech on California’s Prop. 22 signals similar efforts elsewhere may fail or at least face significant resistance, even among progressive voters. Uber’s C.E.O., Dara Khosrowshahi, thanked drivers for supporting the initiative: “The future of independent work is more secure because so many drivers like you spoke up,” he wrote in an email.
Other noteworthy ballot initiatives for business:
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Florida voters approved raising the state minimum wage to $15 an hour, from $8.56, making it the eighth state to set pay at that level.
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Arizona voters appeared to approve raising taxes on the wealthy, while the fate of a graduated tax in Illinois appears shaky. Support for California’s closely watched proposition on raising commercial property taxes still looks to be too close to call.
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Voters approved legalizing recreational marijuana everywhere it was on the ballot: Arizona, Montana, New Jersey and South Dakota. They join 11 states and the District of Columbia, and the revenue from legalization may help economically struggling states. Mississippi voters backed legalizing cannabis for medical use, while Oregon voters approved legalizing the psychoactive substance psilocybin.
The biggest I.P.O. ever is put on ice
Ant Group, the financial affiliate of Alibaba, has been forced to pause its record-breaking market debut in Shanghai and Hong Kong by Chinese regulators, who showed that they remain in charge of the process.
Officials in Beijing said they were acting to protect Chinese capital markets. Regulators rolled out new requirements for fintech companies, including over capital levels and lending. They were widely seen as a brushback against Ant’s co-founder, the billionaire Jack Ma, who said recently that stricter regulations risked stifling innovation.
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Alibaba, which owns about a third of Ant and uses its technology for payments, saw its U.S.-traded shares fall 8 percent yesterday. (Also taking a hit was the army of bankers underwriting the deal, who were in line for a $300 million fee bonanza.)
The move could shake investor confidence in Ant, and beyond. Though the financial giant had raised about $34 billion from its I.P.O., much of that capital hasn’t been locked up. (The company plans to return cash committed by retail investors.) Whenever the company resumes its I.P.O. process, it’s unclear how much demand will remain.
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The delay raises questions, particularly for Western investors, about the risks of investing in China. It’s not lost on anyone that Ant’s I.P.O. would have been the banner debut for Shanghai’s Star Market, the country’s answer to the Nasdaq.
It may amplify concerns in the U.S. about Chinese companies’ independence. The Trump administration has cracked down on companies like Huawei and TikTok, arguing that they are beholden to Beijing. Chinese regulators’ reassertion of their power over the private sector may add to Washington’s skepticism. (That said, DealBook has confirmed a Reuters report that the administration rejected a proposal by the State Department to add Ant to a trade blacklist.)
THE SPEED READ
Deals
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AT&T is reportedly in talks to sell a minority stake in its pay-TV business, including DirecTV, to private equity firms. (CNBC)
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Crispin Odey, one of Europe’s best-known hedge fund managers, is stepping down from the investment firm he founded. (WSJ)
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G4S, the world’s biggest security services company, rejected a £3.3 billion ($4.3 billion) takeover bid by Allied Universal, the second acquirer it has spurned in recent weeks. (FT)
Politics and policy
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The Fed may lay low at its rate-setting meeting this week to emphasize its political independence. (NYT)
Best of the rest
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The Americas chapter of the Court of Master Sommeliers suspended seven members after The Times reported on a longtime pattern of sexual harassment and conflicts of interest. (NYT)
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Theaters may be closed, but streamers and studios are flocking to the stage to meet the insatiable demand for content. (NYT)
We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.
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