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.
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.
-
MoneyWeek news quiz: How much can you win in Premium Bonds?Quiz Premium Bonds, ChatGPT, and the start of the festive season all made headlines this week. How closely were you following the news?
-
Salary sacrifice pensions cap: 3.3 million workers to be hit by contribution limitsThe government has revealed further details of its controversial cap on pension contributions through salary sacrifice. Here is how the changes could affect you
-
The global defence boom has moved beyond Europe – here’s how to profitOpinion Tom Bailey, head of research for the Future of Defence Indo-Pac ex-China UCITS ETF, picks three defence stocks where he'd put his money
-
Profit from a return to the office with WorkspaceWorkspace is an unloved play on the real estate investment trust sector as demand for flexible office space rises
-
An “existential crisis” for investment trusts? We’ve heard it all before in the 70sOpinion Those fearing for the future of investment trusts should remember what happened 50 years ago, says Max King
-
No peace dividend in Trump's Ukraine planOpinion An end to fighting in Ukraine will hurt defence shares in the short term, but the boom is likely to continue given US isolationism, says Matthew Lynn
-
Will the internet break – and can we protect it?The internet is a delicate global physical and digital network that can easily be paralysed. Why is that, and what can be done to bolster its defences?
-
Why UK stocks are set to boomOpinion Despite Labour, there is scope for UK stocks to make more gains in the years ahead, says Max King
-
Chen Zhi: the kingpin of a global conspiracyChen Zhi appeared to be a business prodigy investing in everything from real estate to airlines. Prosecutors allege he is the head of something more sinister
-
Canada will be a winner in this new era of deglobalisation and populismGreg Eckel, portfolio manager at Canadian General Investments, selects three Canadian stocks
