We have successfully tracked down the table that sent Marko Kolanovic over the edge.
As we reported earlier, the JPM strategist went apeshit when one of the bank’s derivatives sales traders had posted a summary of the commodities strategists' views on how a win by former Vice President Joe Biden would affect the market, saying there would be "very little impact" which sparked Marko to flip out. The summary table is presented below, and it comes courtesy of a JPM report titled "Market Intelligence: US Election Update."
As further reminder, this is how Kolanovic responded when seeing the above table: "Wait so our commodity guys base their forecast based on our FX guys’ forecast, which based forecast based on our economist forecast, who bases his forecast of party preference." You can read more about the incident here.
What is more interesting is that the JPM report also laid out the bank's latest quarter of market scenarios, and what we find notable is that here too, there appears to be some political bias... only in the opposite direction, because unlike most of Wall Street, JPM sees a Blue Wave as the worst possible case, a split presidency/Congress as status quo, and a Red Wave as the best possible outcome, one which would push the S&P to 3,900. Here is the full breakdown:
- Biden / Blue Wave – The market likely views this as short-term neutral but long-term negative, as the expected Biden tax policy outweighs the benefits from a larger than expected stimulus package. SPX may have upside to ~3400, but it would have larger downside depending on the details of the package, potentially to ~2,500.
- Biden / GOP Senate – The market likely views the GOP Senate as being a net-positive as we may not see any changes to tax policy while having stimulus-related upside. SPX may hit 3,600. Trump / Dem Senate – This scenario is positive, too. Here, we may see a larger fiscal package, potentially up to Pelosi’s $2.2T request, but without the negative tax consequences since Dems would not have the votes to override a Presidential Veto. SPX may hit 3,600 or higher.
- Trump / GOP Senate – The “status quo” scenario is positive for risk-assets. We may see a larger fiscal package than under a Biden/GOP Senate administration and potential improvements to the existing tax policies. SPX to 3,900.
- Trump / Red Wave – Similar to the above scenario, this is positive for risk-assets. SPX to 3,900.
- Trump / Red Wave – Similar to the above scenario, this is positive for risk-assets. SPX to 3,900
Incidentally, if JPM is right, today's furious meltup may explain all you need to know about the next president/Senate combo.