The ripple effect of President Trump’s positive test for COVID-19 is touching countless areas, including the financial world. Banks are still stress testing for multiple scenarios of the Nov. 3 election, but the focus started to tilt in favor of Joe Biden after the president’s medical condition over the weekend became the most important story in the world.

In the last few weeks, many banks and investors had planned for no clear winner in the election. On Friday, following the unexpected news of the president’s positive test, banks and investors were shifting gears toward a potential Biden victory.

“Trump contracting the coronavirus will elevate institutional money’s preparation for a democratic White House and all the tax, trade and budget implications that go along with it,” James McDonald, CEO of Los Angeles-based fund manager Hercules Investments wrote in a note. “We expect institutional investors to start de-risking portfolios and increasing hedges in preparation for market volatility.”

Prior to the news regarding President Trump’s positive test, a number of the major banks had been running simulations to get a better grasp of the scenarios that may come into play in the case of a contested election or even a constitutional crisis. A spike in the market, liquidity and credit risks could all be in play should we come out of election day with no clear winner.

Despite things trending in Biden’s favor in the last few days, we have no idea what news tomorrow may bring. The election is now less than a month away and if there is anything we can count on this election cycle, it’s to always be ready for more chaotic news.

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