Special edition: Why traders and investors should care about the US election Special edition: Why traders and investors should care about the US election Special edition: Why traders and investors should care about the US election

Special edition: Why traders and investors should care about the US election

Podcast 15 minutes to read
PG
Peter Garnry

Head of Equity Strategy

Summary:  In this special episode of the Saxo Market Call podcast, Peter Garnry, Head of SaxoStrats and Equity Strategy and our host, John J. Hardy, dive into the turbulent seas of the 2024 U.S. Presidential election and its potential impact on the financial markets. Their discussion revolves around several key points that are relevant for investors and traders alike to get a better understanding of the effects of what promises to be a highly contentious electoral battle on global economic dynamics. The podcast was recorded on February 14, 2024.


An election for the ages?
As it gets increasingly likely that the 2024 election will be a rematch between former President Donald Trump and incumbent President Joe Biden, Hardy and Garnry discuss the big lines of what kind of election we could be experiencing. Here, they mention that it will be a battle between two of the most unpopular candidates in history. Simultaneously, the election may also feature a relevant independent candidate, Robert F. Kennedy Jr., for the first time since Ross Perot grabbed over 18% of the popular vote in 1992, underscoring the potential for significant electoral disruption.

How financials impact elections
The pair ponder whether there’s any connection between the financial status of the country in an election year and the electoral result. Using equity market performance and inflation rates as proxies for the economy, Garnry notes that there is a historical tendency that a weak economy means trouble for an incumbent president in terms of getting re-elected, although he notes that the data foundation is quite thin. As a non-exact science and with a US economy that still could go either way in 2024, it remains to be seen whether this will be in favour of either Trump or Biden, but financial figures like inflation, job openings, and GDP growth are identified as key indicators to watch both in terms of presidential popularity and market performance.

Will the Fed steer clear of politics?
Garnry and Hardy discuss what role the Fed will play in the election if any. After the extension of the Fed’s rate hiking cycle in early 2023, the discussion on the prospects for rate cuts from the US central bank has been one of the most prominent in early 2024. As an American recession was almost expected going into the year, rate cuts were expected to follow. But with an economy that’s holding up, the easing cycle has been postponed. The idea of a so-called no landing scenario where inflation reignites, bringing rate hike considerations back to the table, has even heated up, although rate cuts are still more likely. But in this difficult landscape for the Fed to navigate, the election only makes it more challenging. If the Fed is to cut rates, one argument goes that they would probably like to cut early to avoid any impression of political bias around election time. A conspiratorial second theory argues that the Powell Fed favours the more mainstream, “Washington-friendly” Biden, and will tilt as dovishly as it dares to increase his odds of winning.

What a new president will mean for the financial markets
In judging what the US president election will mean for financial markets, Hardy and Garnry state that it may be a bit early days as we need to know the party program for either candidate, which in theory won’t be known until the candidates are officially nominated at the conventions during summer.But what is clear is that one point where the two most likely candidates differ is in terms of the US’ involvement in geopolitical stability, particularly in relation to NATO and defense spending. Here, Biden’s line will be more internationally focused on collaboration with allies, whereas Trump most likely will rein in the country’s involvement in global conflicts. This will e.g. have implications for European defense stocks.

Listen to the full episode now or follow Saxo Market Call on your favorite podcast app:

Apple   Spotify   Podbean    

If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.
 
Questions and comments, please!
We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.