NEW YORK (Reuters) – U.S. President Joe Biden ended his re-election campaign on Sunday after fellow Democrats lost confidence in his intelligence and ability to defeat Donald Trump, leaving the presidential race in uncharted territory.
Here are the investors’ comments:
David Wagner, Portfolio Manager, APTUS CAPITAL ADVISORS LLC, Fairhope, Alabama:
“We may see some reversal of what has worked in the market over the past couple of weeks, with smaller cap stocks taking a run, but I don’t expect the market to give up all of these gains by any means.
“The biggest event for the market is who the Democrats will nominate because their policies and organizational ideas will be more influential.
“Biden endorsed Harris, but I think there will be a lot of cooks in the kitchen over the next couple of weeks vying for the job — I think it’s wide open.”
Jay Lepas, Chief Fixed Income Strategist, Janie Montgomery Scott:
“It’s unclear at this point how Biden stepping down will impact markets. This is partly because we don’t know much about how a Harris administration would differ from Biden 2.0 in terms of economic policy.”
Elise Pfeffer, Market Strategist, Raymond James:
“I think any time you create that kind of change it creates uncertainty.
“This could be viewed negatively in terms of the high deficit. In my opinion, we have two fiscally irresponsible parties.
“I think tomorrow will probably end with the bond market on the downside.”
Art Hogan, Chief Market Strategist at B. Riley Wealth:
“Regarding the ‘Trump trade’, I would say the Trump trade was similar to a large return to the mean in small cap companies based on the Fed likely cutting interest rates in September and seeing Treasury yields drop significantly.
“Of course, we will have to wait until Monday, but my gut tells me that this is not a big surprise for the markets, which have been a pretty effective mechanism for pricing futures.”
Quincy Krosby, Chief Global Strategist, LPL Financial, Charlotte, North Carolina:
“This was expected. It wasn’t really a matter of if he would win, it was a matter of when, and now the next stage is who will win. The question is, will Vice President Harris win his endorsement? Obviously, the vice president would be the easier path. But there have been a lot of comments from prominent Democrats who are seeking a more open process for selecting a nominee. The market will navigate this.
Mark Ostwald, Chief Global Economist and Strategist, ADM Investor Services, London:
“I think it helps remind people — and this is probably the most important point — how does this change the prospects for voting in Congress? Because it’s very likely that the Republican Party will get a sweep, simply because a lot of people would have said, ‘If this is all they (Democrats) can offer, no thanks and let’s just give it to the Republicans and Trump.’”
“This may change the perspective. The races will be close, no doubt about that. But this is actually very important for the outlook for the US dollar, the US deficit, because it is about legislation and passing legislation.”
Bill Strazzullo, Chief Market Strategist at Bell Curve Trading, Boston:
“It looks like Kamala Harris is going to be the Democratic nominee, a former prosecutor against someone with 34 felony convictions. It’s great. It’s great for the country because to me, all the things that were going on in the markets — the potential slowdown in the economy, the ongoing inflation, the questions about what the Fed is going to do — all of those things pale in comparison to the damage that a second Trump administration could do. Whether it’s his crazy economic policies across the board, the tariffs, his abandonment of Ukraine, how destabilizing Europe is going to be.
“He doesn’t care about defending Taiwan. I mean the economy, the markets, the world would be thrown into absolute chaos under his presence.”
James Kotoulas, CEO of hedge fund Typhoon Capital Management:
“I think you’re going to see more volatility just because it increases the uncertainty. Trump is still the favorite to win, but Biden has been so bad that any alternative has a slightly higher chance of beating him.”
Michael Brown, Senior Market Analyst, Pepperstone, London:
“I think we’re going to see a sudden move to avoid risk, as a result of this increased uncertainty. And after all, we’re still four months away from the election. So maybe one of the biggest implications of this is that people are going to start thinking about the election much earlier than we’ve seen in previous political cycles.”
Gennady Goldberg, Interest Rate Strategist, TD Securities, New York
Much will depend on who the party nominates as its vice presidential candidate (assuming Harris is the nominee to replace Biden).
“Kamala Harris may not do better than Biden. Right now, nothing is certain.
“The next few hours will help determine how the market opens. I suspect the Treasury curve will steepen. But if the expected ticket looks like it’s enough to beat Trump, that could actually be good for yields.”
Matthew Gotlin, Chief Investment Officer and Managing Director of Wealth Management at Chorio, Maryland:
“Markets tend to hate uncertainty. You can expect more short-term volatility as we head into November, especially as we wait to see who the Democratic nominee will be.
“Elections are very emotional, but in the markets, things like earnings will matter more in the long run.”
Rick Meckler, Partner, Cherry Lane Investments, New Vernon, NJ:
“This has certainly been on investors’ minds. However, it represents a huge amount of uncertainty as to who the nominee will be, although it is likely to be the vice president.
“Certainly, if he is the vice president, it would probably reflect a continuation of the current Democratic economic policies, so it doesn’t change much in terms of investor sentiment and how the market reacts and what it might face.
“The unpredictability of policy has never been a big positive for markets, but in this case, because it has been anticipated for a long time, I don’t think the reaction will be very immediate.”
Brian Jacobsen, chief economist at Annex Wealth Management, Brookfield, Wisconsin:
“This is a rematch. If Biden had stayed in office, the odds would have tilted increasingly in favor of not only a Trump win, but also a Republican sweep. Now the race is on again. The Trump trade is likely to take a breather as investors reassess the odds of the outcome. That means small caps, financials, energy, and cryptocurrencies could see a slight pullback, but Trump still has the edge.”
Jack McIntyre, Portfolio Manager, Global Fixed Income, Brandywine Global Investment Management:
“I think this will be generally positive at least temporarily for the markets… and it will likely be positive for the bond market, especially given where we are in the business cycle and more importantly, where we are with regard to growth and inflation.
“I think if we get this towards a divided government, that would be positive for the market.”
Jamie Cox, Managing Partner, Harris Financial Group, Richmond, Virginia:
“The question of who the candidate will be will be on the minds of investors very broadly.”
“Markets will be very volatile until the Democratic nominee is announced. This will likely manifest itself through the dollar, creating volatility in fixed income and equities.”
Gina Bolvin, President, Bolvin Wealth Management Group
“Biden stepping down represents a whole new level of political uncertainty. This could be the catalyst for long-awaited market volatility.”
Rona O’Connell, Head of Market Analysis EMEA & Asia – Stonex, London:
“My gut reaction is that everything in the short term is still up in the air, regarding the Democratic nomination, of course. But that may put a brake on the Trump locomotive.
“In terms of risk aversion, the tailwinds are stronger for gold, on this basis alone, than the headwinds. Some of the uncertainty has been removed, by definition, as explained above.”
“At least it indicates a stronger opposition, which is what every democracy should strive for.”