Election Fears Are Moving the Market – and More Chaos Is Coming Back in December 2023, I made a prediction about the presidential election that a lot of people found "shocking," "unbelievable" and even "crazy." I predicted that President Joe Biden would drop out of the 2024 presidential race. I hate to be the one to say, "I told you so," but that's exactly what happened. The truth is I saw it coming. And that's because, with all due respect, I didn't need to be a doctor to see that Joe Biden wasn't firing on all cylinders. Plus, I've been around the market for over four decades now. And during that time, I've met a lot of power players on Wall Street and in Washington D.C. And let's just say, I've seen some things... I know how these people operate behind closed doors. And that's why I was confident in saying that there would be a "shadow" campaign to unseat Biden from the ticket. I even predicted that a left-wing Democrat from California would replace him. (I just picked the wrong one... it ended up being Vice President Kamala Harris instead of Governor Gavin Newsom.) But I'll tell you one thing. I could have never predicted how wild this presidential election would be. Let's consider former President Donald Trump… He was tried for impeachment twice in 2019, was found guilty of several felonies, and is currently facing a slew of other indictments and court cases. On July 13, a would-be assassin shot at Trump in Butler, Pennsylvania, grazing his ear in the process. And if that weren't crazy enough, on September 15, he was the victim of another assassination attempt near his club in Palm Beach (not too far from my house, in fact).
And then we have Vice President Harris. As a result of Biden stepping down and endorsing her, the rest of the party elite fell in line. So, she did not go through the traditional primary process, and that has left some voters discouraged by their lack of a voice in the matter. Meanwhile, RFK Jr. was running as an independent and was expected to peel away votes from both candidates. But in a surprising move, on August 23, he announced that he would remove his name from the ballot in key swing states. This effectively ended his candidacy. And in an even bigger surprise, he endorsed Donald Trump. So, we now find ourselves faced with the choice between Trump and Harris. What the "Trump Trade" Is Telling Us Right Now Now, I don't mean to upset anybody with political commentary. But the election is less than two weeks away and the uncertainty of who will be the next President of the United States is impacting the stock market. Case in point: The recent rise in Treasury yields. Interest rates have backed up quite a bit in the past five weeks, and these rising rates have really weighed on the stock market this week. The 10-year Treasury rose to as high as 4.25% this week, while the two-year Treasury reached 4.07%. Those are the highest levels since early summer. Yields are also up sharply from where they were before the Federal Reserve cut key interest rates in September. At that time, the 10-year Treasury yield was at about 3.6% and the two-year Treasury yield was at about 3.65%. The catalyst seems to be emanating from Europe and what is called the "Trump Trade." This refers to the betting odds of the presidential election. In other words, the better former President Trump's electoral prospects look, the more concerned traders (particularly in Europe) become about the U.S. budget deficit, inflation making a comeback and other economic policies that could put pressure on long-term rates. Right now, our budget deficit is $1.38 trillion, and a growing share of our tax revenue goes to pay interest on the $35.7 trillion national debt. And it's only getting worse. The bond market might be worried about a Trump win, but the reality is it doesn't matter who takes the presidency. Our spending problem is not going away.
The sad truth is neither candidate has the courage to talk honestly about how bad things are. Right now, they are in full "suck up" mode, promising us any and everything under the sun to get themselves elected. And nearly every single one of these campaign promises involves some sort of action that will lead to even less money coming in than is going out. This is why you have people like legendary investor Paul Tudor Jones saying recently on CNBC that the U.S. is going "broke really quickly unless we get serious about dealing with our spending issues." He also said that the bond market may force whoever wins the election to deal with it. What This Means for Investors... The bottom line is that this election season is creating a lot of uncertainty, political strife and market volatility. And after election day, I predict that things will get even more volatile and trigger big swings in the market. This could be due to a contested election, a reckoning in the bond market, an unexpected move by the Fed, a flareup in the Middle East or Ukraine (or all of the above). But here's the silver lining: Unexpected, chaotic events can be a great opportunity to make a decade's-worth of gains in just a few months. That's why I'm hosting my "Day After Summit" with The Freeport Society's Chief Investment Strategist, Charles Sizemore on Tuesday, October 29, at 7 p.m. Eastern time. Because I want you to be able to turn the market chaos that's coming to your advantage. And my friend Charles has the solution. By tracking the moves of deep-pocketed Wall Street investors, he can help investors turn the coming volatility into profits. In fact, Charles is even giving away a post-election trade for free. It's designed to pay off no matter who wins the election. Go here to reserve your spot now. Sincerely, | .png)
.png)
No comments:
Post a Comment