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Source: Zhitong Finance APP
Incumbent U.S. President Joe Biden announced that he would not seek re-election and supported Vice President Kamala Harris as a Democratic candidate.The news was released at a critical moment less than four months after the November election, which could exacerbate the instability on Wall Street.
(I) Market observers have different opinions
The current political uncertainty in the United States is increasing.Since Democratic candidates have not gone through normal primary election procedures, the market lacks precedents to predict their impact.Market observers have different opinions, mainly with the following views:
Viewpoint 1: Bringing more uncertainty
“The primary impact of this statement should be more uncertainty, which often puts the market in a safe-haven mode – stock markets sell off and investors buy quality stocks,” said Zachary Griffiths, head of U.S. investment grade and macro strategy at CreditSights..”
Barry Knapp, managing partner at Ironsides Partners, believes that market uncertainty has increased significantly, which may affect the performance of futures openings.Although Bitcoin shows some volatility, the market has just experienced a turbulent week, and the main factor behind this is not Trump.The deeper reason is the weak economy and the Fed’s hesitation in September on a 50 basis point cut.Obviously, many factors are intertwined, indicating that the market will face more uncertainty in the future.
Gregory Faranello, head of U.S. interest rate trading and strategy at AmeriVet Securities, expects more stalemates in the bond market.The U.S. Treasury market will continue to closely monitor Treasury supply, central bank balance sheet dynamics, and key economic indicators.While the market may experience some price volatility, the Fed’s interest rate decisions should reflect more about what has happened than based solely on expectations.
Wayne Kaufman, chief market analyst at Phoenix Financial Services, said the market may hesitate in uncertainty.He pointed out that although the optimism of artificial intelligence has supported the market to some extent, the upcoming August and September have historically been a period of weak market performance.
View 2: The “Trump deal” will continue
Supporters of the “Trump Deal” believe that the market has long expected Biden’s withdrawal and has priced it, and the public announcement has little impact.
Art Hogan, chief market strategist at B. Riley Wealth, said the most striking phenomenon in the current deals surrounding Trump is the rise in prices of Bitcoin and other cryptocurrencies, reflecting the market’s perception that Trump is pursuing theseAsset categories hold a more positive attitude.He believes that the market is gradually absorbing news that President Biden is not seeking re-election and speculates that if Trump is re-elected, it may bring trading opportunities similar to small-cap stocks that benefit from interest rate cuts.He expects the Fed to take rate cuts in September.
Viewpoint 3: “Trump deal” will fade
Yung-Yu Ma, chief investment officer of BMO Wealth Management, expects Trump’s deal to be temporarily paused until the Democratic candidate’s identity becomes clearer.He warned that the incident brought more political uncertainty to the market and could lead to short-term volatility.
Rhona O’Connel, head of market analysis at Stonex, said Biden’s withdrawal, “My instinct reaction is that everything is open in the short term, especially the Democratic nomination issue. But it is likely to put the brakes on the ‘Trump deal’.As far as safe-haven is concerned, purely from this perspective, gold’s tailwind is stronger than its headwind.”
Matt Maley, chief market strategist at Miller Tabak + Co.: “Trump trades such as Bitcoin and energy will begin to close, and some shocked transactions such as solar stocks or electric vehicles will also rebound. But there is still a lot of uncertainty.Sex, the market doesn’t like this. From now until Labor Day, and then September, we’ll see a sharp surge in volatility.”
Yung-Yu Ma, chief investment officer of Bank of Montreal Wealth Management, said, “Before the Democratic nominee becomes clearer, the ‘Trump deal’ is likely to take a breath. The news also shaking the currency and bond markets, andEmerging market fund managers expect some early ‘Trump deals’ — including selling some currencies in Asia and Latin America and buying El Salvador bonds — to be closed, bringing short-term positives to risky assets.Worries about a strong dollar under the Prussian administration, coupled with tariffs and a potential overwhelming victory for Republicans, have begun to put pressure on emerging assets, which continue to sluggish under the Fed’s uncertain rate cut schedule.”
Viewpoint 4: Better to the victory of the Democratic Party
Jack McIntyre, portfolio manager at Brandywine Global Investment Management, believes risky assets, including emerging markets, may be affected by initial positives, and the market is more inclined to see Democrats’ victory in the House.
Fibonacci Asset Management Global Pte CEO Jung In Yun expressed concern about the possibility of Trump’s re-election, believing that his protectionist policies could have a negative impact on trade, geopolitical risks will intensify, and supply chain shocks may become more frequent.In turn, it will drive the overall inflation level to rise.This macroeconomic environment poses serious challenges for industries that rely on global supply chains and stabilize market conditions, such as automobiles, biotechnology and real estate.
(II) The market spotlight is given to Harris
U.S. President Biden supports Vice President Kamala Harris and does not ensure she gets a Democratic nomination, and Democratic National Committee representatives can freely vote for the person they choose.The most popular candidates in recent weeks are California Governor Newsom and Michigan Governor Whitmer, but Harris remains the most likely candidate.
“Investors should expect a significant increase in volatility. If Vice President Harris can mobilize quickly and bring substantial shock to Trump, we can expect volatility to be the first to be the first to be a big hit,” said Dave Mazza, CEO of Roundhill Financial.Continue. However, if Trump continues to lead in the polls and investors think his victory is inevitable, then the ‘Trump deal’ will take over and volatility will decline. “So, Harry, who is highly anticipatedWhether S can bring substantial impact to Trump is the most concerned focus of the market at present.
Warren endorsesHarris
Zhitong Finance summarizes Harris’ main political propositions as follows:
politics:
–Support the transition to universal health insurance, but its role in private insurance plans;
–Advocate a more radical drug pricing policy, including linking U.S. prices to prices negotiated by other wealthy countries;
–It is likely to continue many of Biden’s foreign policy goals, including supporting Ukraine and maintaining alliances in the Asia-Pacific region;
–Possibly taking a more sympathetic position against the Palestinians in the Israeli-Hamas conflict;
–Support tough policies toward China and advocate “de-risk reduction”.
economy:
–It is expected to promote the Biden administration’s economic policies, including the Infrastructure Agreement and Inflation Cuts Act;
–Supporting raising corporate taxes and criticizing Trump’s tax cuts;
–Proposed policies that support middle-class people, such as refundable tax credits for low-income individuals and couples
Responding to climate change:
–Support policies to address climate change, including the transition to 100% renewable energy;
–Helped to introduce a $20 billion plan to fund climate and clean energy projects.
migrant:
— Her position has changed over time, now supporting potential ICE reforms and criticizing Trump’s border wall;
–Supported the bipartisan border security agreement (ultimately rejected by Senate Republicans).
Harris vs Biden’s main differences
–Harris supports the transition to Medicare for All, although private insurance plans also play a role.This is more progressive than Biden’s position, which favors the public health insurance option on the Affordable Care Act exchange;
–Harris calls for more radical drug pricing policies than Biden, such as linking U.S. prices to prices negotiated by other wealthy countries;
–While both support a national minimum wage of $15, Harris is even more outspoken in punishing companies that violate labor wage regulations;
–Harris advocates for stronger policies to support unions, including abolishing the “right to work” laws and allowing for a second boycott, which is beyond Biden’s labor stance;
–Harris proposes to provide renters with specific tax credits to pay more than 30% of their income to rent and utilities, a policy that is not prominent in Biden’s platform;
–Harris approved $2,000 a month of stimulus payments during the pandemic, which is more generous than the proposal Biden implemented;
–Harris expressed opposition to the Trans-Pacific Partnership and said she would vote against the North American Free Trade Agreement, which are more protectionist than Biden’s.
