I will skip the usual Monday survey today. Well, this week is shaping up to be a real nail-biter for Wall Street. The outcome of the US presidential election on Tuesday has markets collectively holding their breath as Vice President Kamala Harris and Former President Donald Trump duke it out in a tight race.
Polls and prediction markets have been see-sawing between the two candidates, adding to the suspense. How many people were sure the stock market would crash if Trump was elected in 2016?
As Ray Dalio noted, “We will soon find out: (1) whether we will have an orderly transition of power and, if we do not, (2) whether foreign powers will try to take advantage of the United States in its time of weakness.” Just a few years back, these questions would have seemed unimaginable, yet today, they are worth asking.
During a recent Grab ride, the lady driver shared her thoughts on the US election, predicting that the outcome might end up tangled in court battles with people likely taking to the streets in protest.
Hot on the heels of Election Day drama comes the Federal Reserve’s almost-last policy meeting of the year, starting Wednesday. By Thursday, we will know if policymakers decide to bring more rate relief.
After a hefty half-point cut in September, the Fed is still monitoring an economy that has been hobbling along, a labor market that seems to be testing the limits of “job flexibility,” and a stubborn inflation rate. Odds are on a 25 basis point cut according to a junior partner.
And let us not forget the earnings parade. This season will keep marching along with big names on the docket. So buckle up boys and girls, it is looking like a week full of both political and financial fireworks.
As for my position, I am staying cautious in the short term but keeping that long-term bullish outlook firmly in place. After all, the road may be bumpy but I’m confident in the potential for clear skies ahead.