US stock indices shrugged off news of Donald Trump’s hospitalisation over the weekend. The S&P 500 hit a one-month high as Trump was discharged on Monday. Yet the early optimism was undone when Trump ordered an end to talks with Democrats on a second stimulus bill. The S&P 500 finished Tuesday down by 1.4%.
The first stimulus bill lapsed over the summer, leaving unemployed Americans to depend on a patchwork of measures rolled out by the White House and individual states. The Democrat-controlled House of Representatives had initially called for $3.4trn in new support measures before reducing its demand to $2.2trn last week, while the Republican-controlled Senate favoured a figure closer to $1.6trn.
Would equities prefer Biden?
Trump’s surprise announcement that he would ask Republican allies to stop negotiating a stimulus will please fiscal conservatives wary of ever more federal spending, says the BBC’s Anthony Zurcher. Yet it is difficult to see how this benefits Trump politically. A new wave of economic angst before the election will do the incumbent no favours.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The odds of a Joe Biden victory leapt over the weekend in betting markets, says Irwin Stelzer in The Sunday Times. That could be good for stocks, which “abhor uncertainty” when Trump is “uncertainty incarnate”. JPMorgan and Citigroup argue that a Biden presidency will be bullish for shares. They say it could deliver an economic “sugar high” from stimuli, especially if Democrats also take the Senate, as is looking increasingly likely.
In reality, investors are broadly agnostic about who prevails in November, Scott Knapp of CUNA Mutual Group tells the Associated Press. “It’s pretty difficult to overstate how understated the market’s reaction was,” to the president’s Covid-19 diagnosis. Investors don’t care for Donald Trump’s trade wars, but they seem just as unexcited about Joe Biden’s tax and regulate agenda. What does scare them is the prospect of a disputed election.
The president is unwell
Most presidential health scares make little impact on markets, but there have been exceptions, says Lex in the Financial Times. Eisenhower’s heart attack in 1955 saw the S&P 500 fall by nearly 7%, while it dropped by 3% following JFK’s assassination in 1963. Yet three months later – and this applies to nine out of ten pre-Trump health incidents – the market was either up or down by less than 1%. (The exception was Truman’s 1952 hospitalisation.) That is a testament to the strength of America’s institutions, which do not depend upon the health of one man.
Trump’s illness may have a larger impact than usual as it could shape US pandemic policy, says Jeremy Warner in The Daily Telegraph. Yet all this fretting about the election and American democracy seems overdone. Investors may complain about Washington, but they still buy the dollar and that says a lot more than words alone.
-
Will bond vigilantes come for Donald Trump?Bond vigilantes could make a comeback if Donald Trump follows through on some of his promised policies
-
Elon Musk enters the White House – what happens now?Elon Musk has achieved the seemingly impossible many times before in the business world. But will he be able to cut the US government down to size?
-
What Trump's presidential election win means for the US economyWhat will Trump's US presidential election win actually mean for Americans and the rest of the world?
-
Media mogul James Dolan takes straight shot at the limelightControversial media mogul James Dolan has been hailed as a visionary for his Sphere arena in Las Vegas. But can he square the circle financially?
-
Do we need central banks, or is it time to privatise money?Analysis Free banking is one alternative to central banks, but would switching to a radical new system be worth the risk?
-
US election – is the Trump Trade back?The US election is around the corner. How does Trump influence US markets?
-
A bull market on borrowed timeWhile the US enjoys a bull market, it may not last. Will the US rate cut push stock prices down?
-
Pfizer shares rise as US investor takes $1 billion stakePfizer shares are on the up since US activist investor Starboard Value built up a stake in the drug maker. But strategic options appear limited
