The Weekly Insight Podcast – Panic or Certainty?
A little over four years ago, on a Sunday afternoon, it became clear that the U.S. economy was going to be shut down in response to COVID-19. The next day, President Trump stepped to the podium and announced the “15 Days to Slow the Spread” campaign which made the shutdown official. Your author remembers sitting at his computer that Sunday afternoon wondering what the heck to write. It was an unprecedented situation and no one – let us repeat that: NO ONE – knew what the effects would be on the market.
Well. Here we are again. Another weekend with unprecedented events. The attempted assassination of a former President and current Presidential candidate. Let us first start by saying how furious this should make everyone – Republican or Democrat. It doesn’t matter whether you love Trump, or you hate him. There is absolutely no place in our democracy for political violence.
But while there may be no place for it – that doesn’t mean there’s not a history of it. In fact, we’ve done this far too often. Reagan, McGovern, RFK, JFK, Teddy Roosevelt, McKinley, Garfield, Lincoln. We have a sad history of violent acts against our leaders. Donald Trump was the latest, but sadly won’t be the last.
We’re worried about American democracy right now. We all should be. But you don’t come to Insight Wealth Group for lectures about politics. You want to know how this is going to impact your bottom line. Will this cost you money? Should we have “fear” or “greed” right now?
The real answer is we don’t know (yet). We have some ideas we’ll run through. And we’ll know more when the markets open on Monday. But there is a quote from our memo back in March of 2020 that works for this situation as well:
“While this is an unprecedented time, market corrections like this are not unprecedented. And there is one undeniable truth: DON’T sell into the panic. The time to run for the hills was well before anyone knew we needed to run for the hills. The only person in history who got that right was Noah. And he had a little help from the Man Above. Sadly, we’re not getting any heavenly stock picking advice”.
So, if there is panic in the markets this week, we should be calm about it. And we should also remember that we prepared for this (not an assassination attempt – but political volatility) back in May. We got more conservative in portfolios and have plenty of dry powder available to deploy if we do get a pullback.
As crass as it is, we also must address the potential other side of this crisis. It’s quite possible the markets get a bump from the crazed gunman’s horrific act. In fact, as of the moment we’re crafting this memo, futures markets are up significantly.
Source: www.Bloomberg.com/markets/stocks/futures
Why? Certainty. We’ve harped on this a lot in the last few weeks. The market was gaining increased certainty about a Trump presidency after Biden’s disaster of a debate two weeks ago. Incidents like what just happened – and images like the one below – have made Biden’s path that much harder.
(AP Photo/Evan Vucci)
Polls take time to run. We won’t know the true impact of these events until late this week. But political gambling markets are instantaneous and have a strong track record of success. The odds of a Trump victory were high before Saturday. After Saturday, they’re almost insurmountable.
Source: www.RealClearPolling.com/betting-odds/2024/president
Combine that with the fact that Trump already has the polling lead in every battleground state in the nation, and the picture begins to become noticeably clear. Certainty – the thing the market craves – is increasingly at hand.
Of course, we must all remember that both candidates in the race remain wildly unpopular. Going into the weekend, Joe Biden had 57% unfavorability rating and Trump was at 54%. Two weeks ago, in this memo we discussed the possibility of Biden being replaced on the ticket in favor of another candidate after the debate. The belief amongst Democrats – which crystalized prior to the shooting – was that nearly any other candidate would have a better chance against Trump than Biden. They just needed someone our country didn’t hate.
That started to show itself in the betting numbers. On Thursday of last week, Vice President Harris had better odds of being the next President than President Biden did – by nearly 2-to-1. That is a stunning development in its own right. Which is why it’s interesting that Harris’ odds have been cut in half since the shooting.
Why? There is less and less likelihood than any Democrat wants a piece of Donald Trump after what happened this weekend. The would-be assassin got his wish: he impacted the Presidential race. Just not in the way he thought.
So, what now? As we write this we’re praying for the victims of Saturday’s atrocity. But we’re also praying for our nation and our leaders from both parties. It’s time for us to take a step back from the ledge we’re on and understand that just because we disagree, it doesn’t make us enemies.
In the meantime, we’ll be watching the market closely to see how it reacts. But if the initial data holds, and Trump becomes the more certain victor of November’s election, anticipate a positive end to the summer. As crazy as that sounds given what just happened.
Sincerely,
