Grabbing the news headlines over the last few weeks has been the escalating conflict in the Middle East – very worrying indeed. The Russian invasion of Ukraine has slipped down the pecking order in terms of airtime but the conflict rages on. The conflicts in both the Middle East and Ukraine are old wounds that have been festering and have come to the surface, yet again. The US is clear as to which side it supports, but its future actions will undoubtedly depend on who is in the Whitehouse.
With everything going on, including the political party conferences and the upcoming budget in the UK, it’s easy to forget that the world’s biggest economy is about to go to the polls. In fact, due to their system, some have already voted. The party who ascends to power will have important decisions to make, internationally and at home.
I thought I would use this opportunity with one month before Americans vote for their President, to begin outlining what can be expected for America’s economic future, depending upon who gets into the Whitehouse. I have leaned heavily on content from Bloomberg news, Bloomberg Economics and an article in the FT today.
On this week’s agenda:
- Where is the smart money going?
- What are their main differences?
- Kamala Harris’ Wall Street charm offensive
- Blue Sky comment
Where is the smart money going?
With the US election result difficult to predict with no clear sense as to who is going to win, investors are seemingly increasing their derivative trades, believing they can benefit from stock market moves, regardless of who wins.
With fewer than 30 trading days, the election remains extremely close. A growing number of investors are seeking to tap into this potential market turbulence by betting on volatility rising sharply in the coming weeks. A self-fulfilling prophecy perhaps!
A report on ft.com, states that options markets are currently pricing in roughly a 2.8% swing in the S&P 500 on November 6th, the day after the election, according to analysis by UBS. This figure has been gradually rising over the past month and many investors expect it to continue.
Continues…
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Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.