NEW YORK — President Joe Biden ended his reelection campaign on Sunday, leaving the presidential race in uncharted territory. Here’s what investors are saying:
David Wagner of Aptus Capital Advisors Llc in Fairhope, Alabama
“We may see a slight reversal of what’s worked for the market over the past two weeks, with small caps rising, but we’re by no means expecting the market to give up all those gains.
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“The bigger event for the market is who the Democratic nominee is, because their policies and regulatory proposals will have more impact.
“Biden has endorsed Harris, but there will be a lot of chefs competing for the position over the next two weeks. I think there will be a lot of vacancies.”
Janney Montgomery Scott’s Guy Levasseur
“At this point, it’s unclear how Biden’s departure will impact markets, in large part because we don’t know much about how a Harris administration will differ from Biden 2.0 in terms of economic policy.”
Raymond James Ellis Pfeiffer
“I think any time you make this kind of change there is going to be uncertainty.
“This could be seen as a negative in terms of widening the budget deficit. In my opinion, we have two fiscally irresponsible parties.”
“I think the bond market will probably end up negative tomorrow.”
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“With regards to the ‘Trump Trade,’ I believe the Trump Trade is indistinguishable from a massive mean reversion in small cap stocks based on the expectation that the Fed will cut interest rates in September and that Treasury yields will fall significantly.
“Obviously, we’ll have to wait until Monday to see what happens, but my intuition is that the market has a very efficient futures pricing mechanism so this shouldn’t be too much of a surprise.”
Quincy Crosby of LPL Financial (Charlotte, North Carolina)
“This was expected. The real question is not if, but when. The next step is who. The question is whether his endorsement will also be extended to VP Harris. The VP is, of course, the easiest path. But there have been a lot of comments from key Democrats calling for a more open process for selecting a nominee. The markets will ride this out.”
Mark Ostwald, Chief Economist and Global Strategist, Adom Investor Services, London
“I think it helps remind people how this changes the outlook for the congressional elections, and maybe this is the bigger point, because a lot of people would have said, ‘If that’s all they have to offer, fine. Let’s give it all up to the Republicans and to Trump,’ and there was a good chance the Republicans would win outright.”
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“This election may change that perspective. It’s going to be a close race, there’s no question about that. But it’s actually very important for the outlook for the U.S. dollar and the U.S. budget deficit, because it’s about legislation and getting legislation passed.”
James Koutoulas, CEO of hedge fund Typhon Capital Management
“I think we’ll see some fluctuations because of the increased uncertainty. Trump is still the favorite to win, but Biden has been so bad that an alternative candidate has a slightly better chance of beating him.”
Michael Brown, Senior Market Analyst, Pepperstone, London
“I would imagine that we’ll see a knee-jerk reaction to risk aversion as a result of increased uncertainty. Overall, we’re still four months away from the election. So, I think probably one of the biggest takeaways is that people will start thinking about the election much earlier than we’ve seen in previous political cycles.”
Gennady Goldberg, Interest Rate Strategist, TD Securities, New York
“A lot will depend on who the party nominates as its running mate (assuming Harris is chosen 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 expect the (Treasury yield curve) to bear steepen. But if the projected nominee actually looks good enough to beat Trump, that could actually be a good thing for yields.”
Matthew Gotlin, Chief Investment Officer and Managing Director of Wealth Management, Coreo, MD
“Markets tend to dislike uncertainty, and we’ll certainly see some near-term volatility heading into November, especially as we wait to see who the Democratic nominee will be.”
“The election is very emotional, but things like profits will be more important in the long term for the markets.”
Rick Meckler, Partner, Cherry Lane Investments, New Vernon, NJ
“That’s certainly something that was already factored into investors’ minds. But there’s certainly a huge amount of uncertainty in terms of who the nominee will be, even if it’s the likely vice-presidential candidate,” he said.
“Certainly a vice president would likely reflect a continuation of current Democratic economic policies, so it wouldn’t really change much in terms of how investors view it, how the market reacts and what the markets might face.
“Political unpredictability is never a big positive for markets, but in this case it has been expected for a long time, so I don’t think we will see an immediate reaction.”
Gina Bolvin, president of Bolvin Wealth Management Group
“Biden’s departure creates a new level of political uncertainty, which could trigger some overdue market volatility.”
Lorna O’Connell, Head of EMEA and Asia Market Analysis, Stonex, London
“My instinct is that in the short term, everything remains up in the air when it comes to the Democratic nomination. But it may put some brakes on Trump’s momentum.”
“As far as risk-off goes, from this perspective the tailwinds are stronger than the headwinds for gold. As stated above, by definition some of the uncertainty has been resolved.”
“At the very least, this indicates a stronger opposition, which is something every democracy should aspire to.”
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