Trading the election and how both candidates hold risks for the stock market, according to Citi

President Donald Trump speaks during the first day of the Republican National Convention, in Charlotte, North Carolina, U.S., August 24, 2020.

Chris Carlson | Reuters

Though Joe Biden’s victory could spell headaches for Wall Street in the form of higher taxes, President Donald Trump’s reelection may also have an unexpected equity pitfall, according to one of Citi’s top strategists.

Tobias Levkovich, the bank’s chief U.S. equity strategist, advised clients on a number of potential outcomes and what to watch for when trading in the months ahead.

He first warned a Biden win could spark modest selling in the months after the election as investors lock in gains at a lower tax level. And based on recent polling, Citi feels like the election is “Biden’s to lose.”

“We are placing a 60%-65% chance that he wins and a 30% probability of a Trump repeat,” Levkovich wrote. And given a Biden victory, “we would guess that there is a better than 50% prospect that the Democrats take the Senate too.”

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