NEW YORK (Reuters) – U.S. President Joe Biden ended his re-election campaign on Sunday after fellow Democrats lost confidence in his mental acuity and ability to defeat Donald Trump, leaving the presidential race in uncharted territory.
Here are comments from investors:
DAVID WAGNER, PORTFOLIO MANAGER AT APTUS CAPITAL ADVISORS LLC, FAIRHOPE, ALABAMA:
“We may see a bit of a reversal of what has been working in the market over the past two weeks as smaller cap stocks are active, but I definitely don’t expect the market to give up all those gains.
“The bigger event for the market will be who qualifies for Democrats, as their policy and regulatory ideas would have a bigger impact.
“Biden endorsed Harris, but I think there will be a lot of chefs in the kitchen vying for the position in the next two weeks – I believe it’s wide open.”
GUY LEBAS, CHIEF FIXED INCOME STRATEGIST, JANNEY MONTGOMERY SCOTT:
“It is unclear at this time what impact Biden’s stepping aside will have on the markets. That’s in large part because we don’t know much about how a Harris administration would differ from a Biden 2.0 in terms of economic policy.”
ELLIS PHIFER, MARKET STRATEGIST, RAYMOND JAMES:
“I think any time you bring about these kinds of changes, there’s uncertainty.
‘This could be interpreted negatively in terms of higher deficits. In my opinion, we have two fiscally irresponsible parties.
“I think the bond market will probably end on the negative side tomorrow.”
ART HOGAN, PRINCIPAL MARKET STRATEGIST, B. RILEY WEALTH:
“When it comes to the ‘Trump trade,’ I would say that the Trump trade is indistinguishable from a significant mean reversal in the small caps based on the Fed’s likely rate cut in September and on government bonds seeing a significant decline of the interest rate.
“Of course we will have to wait until Monday, but my gut tells me this is less of a surprise for the markets, which have been a considerably efficient pricing mechanism.”
QUINCY KROSBY, CHIEF GLOBAL STRATEGIST, LPL FINANCIAL, CHARLOTTE, NORTH CAROLINA:
‘This was expected. It was really a matter of not if, but when, and now the next phase is who it will be. The question is: does his support count for Vice President Harris? Obviously, the vice president would be the easiest route. But there were so many comments from leading Democrats seeking a more open process for a nominee.
MARC OSTWALD, CHIEF ECONOMIST & GLOBAL STRATEGIST, ADM INVESTOR SERVICES, LONDON:
“I think it helps to remind people — and this is probably the most important point — how does this change the prospects for the vote in Congress? Because it was entirely possible for the Republican Party to get a clean slate simply because a lot of people would have said, ‘If that’s all (the Democrats) have to offer, then no thank you, and let’s turn it all over to the Republicans and to Trump. .’
“This may change that particular perspective. Both races will be close, there is no doubt about that. But that’s actually very important for the outlook for the US dollar, for the US deficit, because it’s about legislation and passing legislation.”
BILL STRAZZULLO, CHIEF MARKETS STRATEGIST, BELL CURVE TRADING, BOSTON:
“It looks like Kamala Harris is going to be the Democratic nominee, a former prosecutor against someone who has 34 felony convictions. It’s fantastic. It’s great for the country because to me all the things going on in the market – potential slowdown in the economy, continued inflation, the questions about what the Fed is going to do – all those things are trivial compared to what the damage would be from a second Trump administration. Whether it’s his crazy economic policies across the board, tariffs, his basically giving up on Ukraine and… how destabilizing that would be in Europe.
“He has no interest in defending Taiwan. I mean, the economy, the markets and the world would be thrown into total chaos with him.”
JAMES KOUTOULAS, CEO AT HEDGE FUND TYPHON CAPITAL MANAGEMENT:
“I think you’ll see a little bit more volatility just because it brings the uncertainty. Trump is still a very strong favorite to win, but Biden was so terrible that any replacement has a slightly better chance of beating him.”
MICHAEL BROWN, SENIOR MARKET ANALYST, PEPPERSTONE, LONDON:
‘I imagine we will see a reflexive risk move, purely as a result of that increased uncertainty. Overall, we are still four months away from the election. So maybe one of the biggest lessons is that people will start thinking about the election much sooner than we’ve seen in previous political cycles.”
GENNADIY GOLDBERG, INTEREST RATE STRATEGIST, TD SECURITIES, NEW YORK
Much will depend on who the party puts forward as its vice-presidential candidate (assuming Harris is the choice to replace Biden.)
“Kamala Harris may not do better than Biden. Nothing is certain at this point.
“The next few hours will help determine how the market opens. I suspect that the government bond curve will steepen. But if it looks like the expected ticket is enough to actually beat Trump, that could be good for returns.”
MATTHEW GOTLIN, CHIEF INVESTMENT OFFICER & MANAGING DIRECTOR, WEALTH MANAGEMENT, CHOREO, MARYLAND:
“Markets tend to hate uncertainty. You would no doubt expect more short-term volatility heading into November, especially as we wait to see who the Democratic nominee will be.
“The elections are a very emotional affair, but in the markets things like profit will become more important in the longer term.”
RICK MECKLER, PARTNER, CHERRY LANE INVESTMENTS, NEW VERNON, NEW JERSEY:
“It was certainly something that was already in the minds of investors. However, it represents a tremendous amount of uncertainty, both in terms of who the nominee will be, even if it will likely be the vice president.
“Certainly if it’s the vice president, this probably reflects a continuation of current Democratic economic policies and so it doesn’t really change much in terms of investor views and how the market will react and what it’s likely to face .
“Unpredictability in politics has never been a huge positive for markets, but in this case I don’t think the reaction will be very immediate because it has been expected for a long time.”
BRIAN JACOBSEN, CHIEF ECONOMIST, WEALTH MANAGEMENT ANNEX, BROOKFIELD, WI:
‘This is another competition. Had Biden remained in it, the odds would have been increasingly tilted not only in favor of Trump’s victory, but also of a Republican victory. Now it’s a race again. The Trump Trade will likely take a breather as investors reassess the chances of the outcome. That means small caps, financials, energy and crypto could see a small pullback, but Trump still has an edge.”
JACK MCINTYRE, PORTFOLIO MANAGER, GLOBAL FIXED INCOME, BRANDYWINE GLOBAL INVESTMENT MANAGEMENT:
“I think overall this will be at least temporarily positive for the markets. It will probably be positive for the bond market, especially given where we are in the business cycle and, more importantly, where we are in terms of the grow.” inflation.
“I suspect if this moves us toward divided government, that’s a positive for the market.”
JAMIE COX, MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND, VA:
“The question of who the nominee will be will re-emerge in investors’ minds in a very big way.”
“The markets will be terribly volatile until the Democratic nominee is announced. That will likely manifest itself through the dollar, creating volatility in fixed income and equities.”
GINA BOLVIN, PRESIDENT OF BOLVIN WEALTH MANAGEMENT GROUP
“Biden’s resignation is a whole new level of political uncertainty. This could be the catalyst for market volatility that is already overdue.”
RHONA O’CONNELL, HEAD OF MARKET ANALYSIS – EMEA & ASIA – STONEX, LONDON:
“My instinctive reaction is that everything remains up in the air in the short term, obviously regarding the Democratic nomination. But it could be a brake on Trump’s locomotive.
“In terms of risks, the tailwind is stronger for gold, purely on this basis, than the headwind. By definition, some uncertainty has been removed, as noted above.”
“If anything, it points to a stronger opposition, which is what every democracy should strive for.”
(Compiled by the Global Finance and Markets teams)