Why investors fear the US election | Charts that Count
Investors fear delay in announcement of US election results
Investors are trying to understand what awaits the stock market – a lot will depend on who is elected president of the United States. But, according to a new study, it can take weeks or even months before one candidate admits defeat..
«Super forecasters» from Good Judgment believe that there is only a 16% chance that the president Donald Trump or Joe Biden recognize the victory of the opponent by the end of the election week The CEO of the company told CNN Business Warren Hatch.
According to analysts’ forecasts, the likelihood that the name of the official winner will not be officially announced before Thanksgiving is 43%. And the global market and economic super-forecasters, whom Good Judgment does not name by name, with a 37% probability believe that the election results will be announced sometime between the end of November and the day of the inauguration on January 20, 2021..
Growing concerns about the lack of clarity in the election outcome for some time could lead to further instability on Wall Street and make the presidential race look like the 2000 presidential election..
Forecasters said the probability that the election results will not yet be clear by inauguration day is 4%. In this case, the Speaker of the House of Representatives is currently Nancy Pelosi, could become the president of the United States.
What should investors do if there are no election results before early 2021? Market experts advise not to panic. While uncertainty in the short term could hurt the market (and possibly the economy as a whole), the presidential race will eventually come to an end. And then the time will come for Washington and Wall Street get back to work again.
History shows that exiting stocks to cash immediately after an election is a bad idea, regardless of the outcome of the presidential race..
According to the data Brian Levitt, of the global market strategist Invesco, investors who invested in the market immediately after the elections, since 1980, have done much better than those who exited during the first 100 days of the presidential term.
Levitt discovered that investing $ 10,000 in S&The P 500 yielded $ 324,000 in returns over the past forty years, compared with just $ 169,000 in returns when investors sold stock and stayed idle in the early days of the first or second presidential timing.
In other words, investors should not be intimidated by political uncertainty..
The 2016 election completely upended normal relations between Wall Street and Washington, as many investors believed he would win Hillary Clinton. As soon as it became clear that Trump had won, there was a brief panic in the overnight trading in futures, followed by a steady rise..
«There is a growing consensus that America will be in turmoil if we have a closed election or a Biden victory, but I doubt the majority will be right, writes Mark Chalkin, founder of Chalkin Analytics, in his report. – Looking back at 2016 … we got Trump’s victory and a strong rally … it means so much to the market’s ability to predict election results».
This does not mean that politics does not matter at all to investors. But the big difference between 2020 and 2016 is that the economy is now in a recession caused by the pandemic. Four years ago, the economy grew, albeit slowly.
This is why most market experts and economists believe that it is important for Congress and President Trump to reach an agreement as soon as possible to increase financial assistance to the economy. This is necessary to help needy consumers and businesses, the sooner the better.
Good Judgment&# 39; s Hatch said their analysts predict a 65% chance that there will be no progress on new fiscal stimulus until the new year.
But the American economy needs help now. One market strategist told CNN that lawmakers and the president should put aside political divisions and fears of spending more and more money. It is needed to solve the most pressing consumer problems.
«While surging deficits are a long-term issue, ultra-low bond yields prove that this is the subject of tomorrow’s debate. Spend your money now – America is watching and waiting», – called in his report Julian Emanuel, Chief Strategist for BTIG Equities and Derivatives.