It’s anyone’s guess who will win November’s US presidential election, but equity gains indicate the uncertainty isn’t bothering investors.
Investors aren’t alone in their nonchalance. Duke University’s latest quarterly CFO survey asks respondents to list their biggest concerns. The US election only accounted for 4 per cent of responses – well below monetary policy, labour quality and inflation, and similar to issues such as nonlabour costs and regulation.
This would be unsurprising if both candidates were alike, but they’re not. JPMorgan’s Michael Cembalest cites data showing this is a “historically polarised” election, as measured by the ideological gap between the candidates.
Cembalest notes Donald Trump is proposing a 60 per cent tariff on Chinese imports and a 10 per cent tariff on all imported goods.
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So does Irish economist Michael O’Sullivan, formerly of Credit Suisse, who says a second Trump presidency “could begin with a trade war”. O’Sullivan is “surprised” markets are not pricing in uncertainty over trade policy. The next month, he says, “will start to reveal how seriously financial markets take economic rhetoric of each of the presidential candidates”.
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