Considering President Trump’s COVID diagnosis, we wanted to share a few of our initial thoughts with clients. We wish for the President and First Lady the same as we wish for anyone afflicted with this virus. That is, a speedy recovery with no ill effects. Markets are reacting to the news, so our main concern is keeping you informed on our views.
We have always been apolitical when it comes to navigating the markets. Removing emotion and political bias is essential to making sound investment decisions. So, you can expect nothing but an apolitical approach to making decisions during this election season.
That said, we watched the presidential debate along with most of you. While all of us may have felt like we needed a shower after watching the proceedings, markets shrugged it off. The day following the debate saw stocks rally. This may not have been so much suggested that one candidate lost the debate as much as it suggests no candidate won. In other words, it was a bit of a “yawn” for the market.
Our view is the election will not impact markets as negatively as many people think it will. History suggests volatility actually declines in the days following the election, regardless of who wins or whether there is a change in party. We do not expect much different this time.
As for President Trump’s COVID diagnosis, we think the outcome will be binary. If he succumbs to this deadly virus then the election will take on a new dynamic that markets have not fully priced in. If he recovers, as have most people, then his popularity will get a boost.
It is certainly possible that factors, such as age and weight, could lead to a tragic outcome for the President. Markets will be volatile surrounding this outcome but not as much as many may think. Since the market is already considering the possibility that the President will not win re-election, a tragic outcome from COVID would not lead to a transition in leadership that would be shocking.
On the other hand, if the President is asymptomatic and recovers quickly and without incident, it could solidify his bid for re-election. Following Prime Minister Boris Johnson’s recovery from COVID, his popularity rose. It is not a stretch to expect a bump in popularity for the President if he fully recovers. His recovery would line up favorably with the election for such a popularity bump.
So, for now, we do not expect the volatility this morning to represent the beginning of something more lasting. Until we hear from the President, markets will be touchy. It is likely that some relief will be felt by markets once the President speaks….or Tweets.
We expect to provide more details about our view on markets soon. In the meantime, please know that we are monitoring markets for any shift in the internal market indicators we track.
Sincerely,
Kessler Investment Group, LLC
All information above is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.
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