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JPMorgan sets out a nightmare election scenario that could send markets in a queue



Michael Kembalest, chairman of market and investment strategy at JPMorgan Asset Management, warned in a report Wednesday of “the remote risk of American horror history” and “constitutional chaos.”

“Ultimately: A LOT of unorthodox things have to happen for Trump to be re-elected,” JPMorgan’s strategy said. “However, I do not rule out anything.”

The post-election chaos will, of course, shake up markets that hate insecurity. The election, which was smoother than fears, kicked off Wall Street, with the S&P 500 marking its largest post-election rally since 1932.

But if investors don’t know who will be in charge of the world̵

7;s largest economy, they could easily sell first and ask questions later.

“Markets may react negatively if the United States, as a country of world reserve currency, is seen as sliding down the road to electoral illegitimacy due to post-election maneuvers by political parties,” Cembalest wrote.

“Duel interventions”

Of course, legal experts say Trump’s long-running candidacy to cancel the election is just that, a long time ago. Simply put, Trump is losing by too many votes in too many countries.

As Dembalest notes, Trump will have to “reverse or impede the results in three states” to prevent Joe Biden from reaching the 270 electoral votes required by the Constitution. And as CNN reported, despite Trump’s baseless allegations (which Twitter has repeatedly noted), there is no evidence of the widespread fraud needed to undo those results.
“Relax. Biden will be sworn in on Jan. 20,” Ohio constitutional law expert Edward Foley wrote in the Washington Post last week, quoted by Cembalest.
Bitcoin rockets over $ 18,000.  The highest value of all time is visible

However, the JPMorgan strategist outlined several developments that could call this result into question, including that one or more countries submit competing voter lists. These competing boards will then be decided on January 6 by the new Congress through rules set out in the 1887 Election Census Act.

“The nightmare scenario for the markets,” Cembalest said, “would be if Senate Republicans declared the ECA unconstitutional, turned three states in Trump’s favor to give him the 270 votes he needed, and Democrats refused to participate.”

“All this creates the prospect of dueling in office,” Dembalest wrote, noting that this result was “barely prevented” in 1876.

Another risk posed by Cembalest is if Barr directs investigators to “seize or confiscate election records” to investigate voter fraud by delaying the process.

Dimon: “We have a new president”

For the most part, investors seem to be ignoring Trump’s war over the election results.

Markets did not shake in response to headlines about the numerous cases of his campaign. If nothing else, Wall Street came to terms with the election results even before CNN and other media predicted Biden would be the winner.

Investors have focused heavily on other issues, including U.S. Senate makeup, progress in the effort to develop a coronavirus vaccine to combat a deteriorating pandemic, and prospects for economic recovery.

A messy Trump-Biden transition will derail the desperately needed stimulus

But some are beginning to raise concerns about the transfer of power.

“I think we’re doing too little of that,” CNBC presenter Jim Kramer said Wednesday as he voiced concerns about a peaceful transition to a new administration.

Liz Ann Saunders, chief investment strategist at Charles Schwab, said that although her company’s experts did not see much risk from “fraudulent” voters, “there could certainly still be some political event with a black swan.”

Perhaps, listening to Cembalest’s warnings, JPMorgan CEO Jamie Dimon has repeatedly called on Americans to respect the election result.
“We need a peaceful transition. We had an election. We have a new president,” Dimon said on Wednesday during the New York Time DealBook virtual conference. “You have to support this, whether you like it or not, because it is based on a system of faith and trust.”




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