Russ argues that the election may have less of an impact on markets than many are expecting.
With the summer over and the presidential debates just around the corner, investor attention is increasingly turning to the U.S. election. In my travels and meetings, I frequently encounter two strongly held views about the election’s investment implications: First, no matter who wins there will be a market-moving increase in fiscal stimulus, and second, the election will be a source of volatility. I would question both views.
Market Realist – 2016 US presidential election outlook
The United States presidential election of 2016 is scheduled for Tuesday, November 8, 2016. This election will mark the fifty-eighth quadrennial US presidential election. The 2016 election will determine the forty-fifth president and forty-eighth vice president of the United States. Between February and June 2016, a series of presidential primary elections and caucuses took place among 50 states, the District of Columbia, and the US territories.
After defeating various candidates in the Republican primary elections, Donald Trump, business figure and reality television personality, became the Republican Party’s presidential nominee on July 19. In opposition, former Secretary of State and New York Senator Hilary Clinton became the Democratic Party’s presidential nominee on July 26. Third-party and independent presidential candidates Gary Johnson (Libertarian Party nominee) and Jill Stein (Green Party nominee) are also running in the election.
Market Realist – Long-term investment
From an investor’s point of view, a Republican or Democrat president and a divided or undivided government are not the best signposts to help structure a portfolio. There are many other market-moving factors, like oil and gas (USO)(UNG) prices, interest rates, technological (QQQ)(SMH) breakthroughs, and industrial (FXR)(IYJ) innovation, to consider in the long run.
In the next parts of this series, we’ll discuss the implications of increased spending and its effect on stock markets and interest rates.