Here are the opinions of analysts and experts for optimal asset allocation ahead of the presidential elections at the end of the year.
What happens if Biden wins the 2024 US election? Forecasts on the markets, treasury and dollar. Overall, the US presidential election generates a climate of uncertainty that is reflected in global financial markets.
Biden’s proposed policies, such as increased taxes for the wealthy and greater support for renewable energy, infrastructure, and healthcare, could impact the stock market. Similarly, proposed tax and spending policies could affect Treasury bond yields, potentially affecting investors. The outlook for the dollar will also depend on several factors, including developments in U.S. monetary policy and global economic growth.
According to experts, it is best to move money to certain investments now, without waiting for the outcome of the elections.
In this article we will take a closer look at the impact of Biden’s victory on these three asset classes, providing the information needed to adjust investment strategies in response to these changes.
Stock market
Political uncertainty usually generates market turbulence, and the 2024 election is no exception.
While the market has historically tended to thrive regardless of political affiliation in power, with the current political environment and conflicting fiscal policy proposals between candidates, investors are urged to carefully evaluate the implications of Biden or Trump on his investment strategies.
A Biden victory would likely lead to a increase in federal taxes, especially for high-income taxpayers and businesses. This could negatively affect listed companies, while Trump’s proposed tax cuts could support them. However, a more restrictive fiscal policy could lead to a greater deficit, with consequences on the trend of interest rates and the yield curve.
At a sectoral level, a Democratic victory could maintain the status quo for energy policy, while a Republican victory could lead to cuts in public spending with impacts on diversification towards alternative energies and technologies. However, sectors such as healthcare and technology could continue to thrive regardless of the election outcome, offering long-term investment opportunities.
However, investors tend to favor divided government, as it forces compromise and reduces the uncertainty of extreme policies. With Biden in office, potential tax increases for the wealthy are expected, while energy and infrastructure policies may receive more attention. Companies operating in the renewable energy, infrastructure, and healthcare sectors could benefit from increased government support, offering long-term investment opportunities.
Treasury changes
The elections also influence the performance of US Treasuries, with the government called upon to face a record public debt, which at the beginning of 2024 reached 34.4 trillion dollars.
The issue is worrying considering that in the last ten years, US public debt has increased from 60% to 120% of GDP, putting the government in difficulty in borrowing money in the context of high interest rates.
The fiscal policies proposed by the candidates will directly affect Treasury bond yields. While Biden could increase government spending and reduce revenue through increased tariffs on the rich, Trump could seek to reduce taxes, increasing the fiscal deficit. These scenarios could lead to more volatility in bond markets, with a particular focus on long-term Treasury bond yields.
The US dollar
The dollar will be highly volatile during the presidential election year, driven by several factors, including developments in U.S. monetary policy, global economic growth, and geopolitical tensions between the United States and China.
Analysts at Bank of America (BofA) agree that the next few months will be a turbulent period on the currency markets and observe how - historically - Democratic presidents tend to support the dollar, while Republican ones tend to weaken it. However, the current landscape is much more complex and risks undermining this correlation, as the outcome of the elections could shape US economic policy and influence international currencies.
According to JPMorgan, if Trump wins, the dollar could strengthen, fueled by the prospects of a potential trade war and the impact of his protectionist policies. The introduction of trade tariffs could lead to a 4-6% increase in the weighted value of the dollar, according to experts.
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.|
Original article published on Money.it Italy 2024-03-13 12:31:50. Original title: Cosa succede se Biden vince le elezioni USA 2024? Previsioni sui mercati
