Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
How the US election may impact your portfolio
US Election
Saxo
Summary: In this special edition of the Saxo Market Call podcast, as Peter Garnry, Head of SaxoStrats and Equity Strategy, and our host, John J. Hardy, discuss the potential ramifications of the 2024 election on the global financial markets. The discussion explores several key concerns that may be relevant for investors and traders, with the hopes of giving a better understanding of how a highly contentious election could affect the worldwide economy.
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:
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.
Related Articles
US Election
US Election
US Election
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer