The presidential election is the next known major event before Wall Street. Investment strategists are busy launching political scripts, most of which start with words like “Customers continue to ask about the impact of our elections…” This is the primary risk factor cited and a common excuse for predicting fall volatility.
In other words, everyone may overestimate the important or lasting role of the US election in the market.
But isn’t this election two fiercely competitive choices? One is a completely different worldview and economic philosophy, and the other is a concern about the fairness of elections and the delay in election results.
of course. But one reason to think elections are exaggerated as decisive, available market volatility is that investors always exaggerate elections, which rarely prove to be instrumental inflection points in the economic or market cycle.
To view elections as a specific catalyst for investment initiatives, one must hinder election results, predict the composition of Congress, intuitively understand key policy priorities, evaluate their likelihood of becoming law, estimate their economic impact, and then determine how much of this decision tree has been priced to the financial markets. Does it sound feasible?
*From Reagan to Trump *
Ronald Reagan brings the greatest bull market in modern times, what do you think? After the November 1980 election, the stock market was weak until the end of the recession in October 1982 and the Federal Reserve's easing monetary policy began to rebound.
Clinton's market paradise in the 1990s? When he was elected president in 1992, the economy and stock markets were already in a state of recovery, when the Federal Reserve kept interest rates low, and the sharp growth in the 1990s began after 1994, when policymaking was deadlocked.
Think about whether the increase in capital gains tax rate after President Biden took office will suppress the stock market? There may be a trend of early selling. But the capital gains tax hikes in 1986 and 2013 did not undermine a strong bull market.
As we all know, in 2016, Wall Street's wisdom was wrong, when Donald Trump's victory was seen as a danger to the stock market. As returns increased, S&P Futures briefly fell 7% overnight, apart from that, it was a big mistake, as the already nervous and cautious stock markets quickly repriced due to rising nominal growth rates, lower taxes and reduced fiscal constraints.
However, even if investors know the results in advance, the way they agreed to play the game is quite wrong. Energy and financial stocks are seen as the best bets under the deregulated Trump administration; they are the worst industries since 2016. After about a month after small-cap stocks , oil stocks and bank stocks rose, the bull market led by technology stocks began again.
*Statistical significance? *
One of the more obvious patterns in the market is not their reaction to elections, but their performance before elections. Ned Davis Research noted that from September 15 to 1900 presidential election day, the market performed better than failure before the current party won. Leading the stock market is most favorable to the Republicans before winning.
But there is a difference between the average increase of 3% and the average loss of 0.6%, which is not a huge performance gap. Since the emergence of modern markets, has only had dozens of U.S. presidential elections. Can market experience under various results and political party arrangements provide a certain degree of statistical significance and thus determine investment strategies?
Losses during the Republican administration were the worst for the stock market before the election, but guess what? This is the best of all market returns set in the year after the election.
*Expected fluctuations*
The market trend before this year's election seems to be particularly obvious in several areas. For months, the volatility index (VIX) futures market has maintained a high price for protection against volatility during the election. In normal markets, VIX futures prices rise with the extension of maturity. But October and November volatility index (VIX) futures (which capture election-related market turmoil) are above 30, and prices will fall in the following months.
Bond market strategists also pointed out that around November 3, the market-based volatility expectations of US Treasury and corporate bond instruments also showed a similarly significant increase.
这就提出了一个问题，如果各机构已经为如此之早的投票做好了充分的对冲和防范，那么结果(无论结果如何)是否不会引发紧张局势的缓解？
*Unresolved results*
But unresolved or controversial results? It makes sense to keep the market anxiety going for a while. Goldman Sachs (Goldman Sachs) pointed out last week that "the market expects the day-to-day trend to drop from 3.2% in mid-August to 2.8% now, as investors assessed that it may take longer than usual to get the final election result."
But even when the 2000 election was pending for more than a month, the market's uneasiness about the election was not even seen as the core of the market path when it was reviewed - in this case, a bear market that began eight months ago and did not bottom out until the end of 2002 is unfolding.
DataTrek Research联合创始人杰西卡·拉贝(Jessica Rabe)指出，从2000年大选日到最高法院裁定布什(George W. Bush)获胜的五周时间里，标普500指数下滑了4.2%。 However, not long ago, the already under pressure Nasdaq (Nasdaq) absorbed the main earnings warnings from Microsoft (Microsoft) and a large number of other technology companies.
正如拉贝所说，“长期和显著的波动通常源于经济冲击，而不是政治相关的问题。”
这并不是说即将到来的选举不能成为市场进一步动荡和投资者风险厌恶情绪上升的完美合适的借口，为目前领先市场的股票已经突破了前进的步伐，股市已进入回调模式。
但在所有相关因素中——美联储的坚决支持、断断续续的经济复苏、强劲的住房需求、企业利润从低迷水平上升、投资者愿意为长期增长的股票买单——选举不太可能是决定或打破这一周期的因素。
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-