We’re regularly asked how markets will react after to a Republican or Democratic victory in the 2020 Presidential Election. Chief Investment Officer Jim Lowell discussed this topic in our recent quarterly webinar*: Tariffs, Trade and Trump.
Please enjoy the excerpt below and click herefor the full webinar replay to hear more.
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Jim Lowell: One of the things that we know is that the markets can react fairly dramatically in a very short-term time period—whether President Trump is or is not reelected. One might suspect that we’ll see some volatility, both going up to and through the election time period.
But then the markets will, very quickly, reprice to what they think they know about the fundamentals. The key concerns for the markets over time are always going to be earnings, interest rates and economic data that supports either more economic growth domestically and globally—that’s expansion, or less global growth and domestic growth. That’s contraction.
The Fed has done a great job of walking us through the ways in which they see this environment has been challenging to them despite the fact that our economy remains in healthy, slow-growth not no-growth mode and that the U.S. consumer, the driver of our economy, is in absolutely good shape.
The Fed continues to mention the term “cross-currents” and what they’re really pointing to are things like concerns over tariffs, concerns over policy and real concerns over the rate of global growth, which is slowing not growing—and perhaps more measurably than one might want to think in China and Germany posting its seventh consecutive contraction in terms of purchasing managers’ indexes. Germany is the leading economy inside of the E.U., and that means that the E.U., as a whole, is very low-growth, more vulnerable to no growth, so we may not be there yet.
But the Fed is certainly vigilant and concerned that we may get dragged into some sort of economic downturn. I think that’s what the market’s going to be focused on, both now and after whomever the next president of the United States of America will turn out to be.
*Webinar recorded after the market closed on July 24, 2019.
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