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Sunday, September 27, 2020, 00:02
A strange sentiment, something between fear, shame and insecurity, dominates the markets ahead of the US elections on November 3. Who else is responsible, Donald Trump, who caused an earthquake in the United States, when last Wednesday he refrained from committing to ensure the smooth transfer of power in the event he is defeated.
A White House spokeswoman was quoted as saying that “the president will accept the outcome of free and fair elections” and did the opposite. There has been a lot of discussion in the international press about what will happen if Trump considers that the electoral process was neither free nor fair.
At a time when the United States is counting more than 207,000 deaths and more than 7 million cases and the main problem remains the appropriate response to the pandemic and its economic consequences, Trump is doing what he knows very well. Cause uncertainty and confusion. He also looks nervous and now many analysts are expressing serious concerns about what we might see happen in the United States next November.
Currently, markets are trying to recover from the correction throughout September, in which the S&P 500 has recorded 4 consecutive weeks of decline and losses of 7%. Given that Trump views the economy as an important ally and, at the same time, finds it difficult to get a new package of support from Congress before the election, his high hopes are on Wall Street, whose profits he often cites to show that he has received the right thing. decisions in the economy.
But the more concerned investors are about what will happen after November 3, the more likely the correction is to continue, something the US president wants to avoid at all costs in the final stretch to the polls. Analysts’ estimates of the outcome of the elections reinforce the climate of uncertainty.
Who does Wall prefer?
American statistics firm FiveThirtyEight gives Biden a 76% chance of being the next White House resident, but American media reports say 7 betting companies now give Biden an average of 53.7% and 45.6% from Trump, confirming that we are going to a derby.
Goldman Sachs believes that it is not clear which of the two candidates Wall prefers and this fact complicates matters even more. A possible increase in corporate taxes by Biden is the most immediate hit on the stock market, but the Democrats have the trump card that they are expected to spend more money to support the economy and, at the same time, businesses. they expect a more predictable trade policy with the Biden president. .
Even Goldman, however, argues that the risk of a long delay in finalizing results now overshadows other problems. On the other hand, if in the end the difference is large and the transition of power is smooth, the markets will be boosted and then the program of the new government will be evaluated.
The last time the results were contested, the main Wall Street index, the S&P 500, posted losses of more than 8% from Election Day to the final announcement of the winner. It was in 2000 that the result between Al Gore and George W. Bush in Florida was marginal in the November 7 elections. The state decided to recount the votes and then Al Gore requested a manual recount in 4 counties to reach the Supreme Court and a final winner on December 15.
With all the uncertainties that exist today, such as the evolution of the pandemic, the weakening of the recovery and the increase in unemployment and poverty, all that global markets did not want today is a controversy over the outcome of the US elections.
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