Bloomberg wrote yesterday
The assassination attempt on former President Trump over the weekend has boosted his odds of winning the US election and may push traders to pile into sectors that stand to benefit the most from a Republican control the White House.
The unprecedented nature of the attack will boost volatility and in the immediate could see investors to seek safety in the 2024 defensive—mega caps but also support stocks that do well in a steepening yield curve, energy, and crypto.
Bloomberg also strongly inferred the President’s cognitive issues are no longer an issue as some Democratic operatives have “thrown in the towel” and the election is now Trump’s to lose.
Yesterday energy was the best performer followed by the financials as the yield curve steepened considerably.
It is believed that a Trump presidency will be more fiscally harmful than a Biden Administration causing rates to rise given the greater odds of fiscal irresponsibility.
The above rationale is controversial with many adamantly believing the inverse.
As written many times, neither candidate has addressed the unsustainable national debt and prolific fiscal spending that is producing $2 trillion deficits for the foreseeable future. Will the deficit become a major campaign issue?
If long term interest rates surge, yes.
Again quoting Jim Carville infamous 1992 statement when President’s Clinton’s progressive agenda was thwarted, Carville stated “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”
The election is still 3 ½ months away, an eternity in politics. Will the vitriol cease and the election will be about current and proposed policy? Or will this only be a temporary truce?
There are a ton of movies where the “bad boy” becomes good. The person today who becomes good is perhaps dependent upon one’s preconceived bias. Both candidates have pushed and have perhaps exceeded accepted boundaries.
It is often to written the first virtue lost in war and politics is truth.
What will happen today?
Last night the foreign markets were down. London was down 0.36%, Paris down 0.47% and Frankfurt down 0.48%. China was up 0.08%, Japan up 0.20% and Hang Seng down 1.60%.
Futures are flat as equities are becoming more convinced the Fed will ease this year as some are beginning to embrace the idea of three interest rates cuts this year commencing in September. The 10-year is up 14/32 to yield 4.18%.
