Week of May 27, 2024

Dec Mullarkey, CFA , Managing Director, Investment Strategy and Asset Allocation

Markets generally pay little heed to U.S. presidential elections until approximately three months in advance of the vote, usually waiting for the respective parties to hold their summer conventions and anoint their leaders. At that point, the nominees are expected to have fined tuned their policy agendas and pitches on why they deserve to lead.

This time may be different. The first scheduled debate between the presumptive nominees is about a month away. Relative to history, this is very early. But given that the frontrunners are household names, this probably provides the opportunity to go head-to-head and get an early read on voter reactions.??

The big issues are likely to be taxes, tariffs and fiscal policies. But regardless of what disruption the candidates promise, they can only deliver if they have agreement from the two chambers of the legislative branch of government. Markets generally like a divided government – where a single party doesn’t control the presidency, the House and the Senate – which allows for more checks and balances.

However, one area in which presidents tend to have more sway is on trade. And on that note, the presumptive candidates are ramping up the promise of more tariffs, particularly on China. As more tariff intentions and details are rolled out, markets will look to assess the probability of enactment and the intensity of the impact from the proposals.

So, volatility around trade and geopolitical risk could start to increase. Higher geopolitical risk tends to support a stronger dollar, as the U.S. is perceived as a safe haven even if it is the cause of the risk.

Sources: Bloomberg, Goldman Sachs, PredictIt, Brookings Institute, 2024.

The information may include statements which reflect expectations or forecasts of future events. Such forward-looking statements are speculative in nature and may be subject to risks, uncertainties and assumptions and actual results which could differ significantly from the statements. All opinions and commentary are subject to change without notice. SLC Management is not affiliated with, nor endorsing, any third parties mentioned within this article.

Market insights are based on individual portfolio manager opinions and market observations. These are observations only and are not intended to provide specific financial, tax, investment, insurance, legal or accounting advice and should not be relied upon and does not?constitute a specific offer to buy and/or sell securities, insurance or investment services. Investors should consult with their professional advisors before acting upon any information posted here.

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