Harris is a “key player” in Monday’s offering
While it cannot be said with certainty that the end of the soft landing and the market crash were caused by Kamala Harris, anyone investigating this issue should consider the following: The Vice President is a key witness.
Former President Donald Trump’s polling lead over President Joe Biden began to grow significantly in mid-June, about two weeks before the candidates’ historic debate. At the end of the first week of June, Trump was at 45.1% in the Real Clear Politics polling average, slightly ahead of Biden’s 44.8%. Two weeks later, Trump is leading with 46.5% and Biden with 45.2%..
Trump’s lead in the debates quickly grew. By July 3, he was leading Biden by 3 points in the polling average. And the former president They held that three-point lead for the next three weeks.— until Biden eventually dropped out of the race altogether. Prediction markets and election forecasting models like those by Nate Silver had projected that Trump had about a 70% chance of winning the election.
Trump’s lead has been very good for stocks
This has been a great time to be a stock investor. The S&P 500 rose 7.3%. From early June to mid-July. That’s a pretty good return for a year crammed into about six weeks. A big driver of this surge was growing confidence that the Fed would cut interest rates later this summer, but the market was at least boosted by President Trump regaining control of the White House and the increased likelihood that Republicans would win control of the Senate and retain control of the House of Representatives in a landslide election victory.
It’s no surprise that the stock market rises when Trump’s approval rating rises. Americans believe Trump will have a positive impact on the economy According to the University of Michigan Consumer Sentiment Survey, 40% of Americans believe that Trump will have a positive impact on the economy, while 35% believe that Biden will have a positive impact.
Similarly, Trump has a large lead in polls asking voters how their personal finances will be affected by the election results, according to a University of Michigan survey. 39% said Trump is the best candidate for their personal financesJust 32 percent said Biden did.
The University of Michigan’s Consumer Sentiment Index fell sharply in July, but this was entirely due to growing dissatisfaction with the current economic situation. Sentiments about the current situation fell among Democrats, Independents, and Republicans, but the Expectations Index rose in July. Fueled by a big increase in optimism among Republicans.
Explaining broad movements in financial markets requires some speculation, but this provides some strong circumstantial evidence: Rising stock prices were associated with an increased chance of a Trump victoryAt the very least, markets seem to have liked the reduction in political uncertainty that Trump’s rise suggests.
Harris’ Rise and Stock Market Fall
All that was upended when Biden dropped out of the White House race and endorsed Harris, who has been leading in several recent polls. In Silver’s model, she Slightly better than even odds His chances of winning in November are far greater than his chances of winning the popular vote.
Harris is Very few are good for the economy or personal financesA recent YouGov poll for CBS News found that only 25% of Americans expect Harris’ policies to make them better off financially, while 44% expect them to be poorer under her policies. For Trump, 45% expect them to be poorer, while 38% expect them to be poorer.
When you break this down by party affiliation, the results are startling. Among Democrats, Only 53 percent Eighty-seven percent expect Harris’ policies to improve their lives, compared with 43% who say they will make no difference. Among Republicans, 87% say Trump’s policies will improve their lives, compared with just 10% who say they will make no difference. (Oddly enough, 3% of Democrats say Harris’ policies will make them worse off economically, and the same percentage of Republicans say the same about Trump’s policies.)
Given these expectations, it’s surprising that investors aren’t worried about Harris’ growing popularity. Many seem to have concluded that a Harris win would make the so-called economic soft landing — an escape from inflation without a recession — much less likely. The S&P 500 fell 6%.It has almost completely wiped out the momentum of Trump’s previous rise.
Was Harris the only one driving Monday’s sell-off? Of course not. Last week’s jobs report revealed economic fragility The manufacturing PMI played a big role in encouraging a more pessimistic attitude towards the economy. The unwinding of the Japanese carry trade undoubtedly forced a sell-off. And let’s not overlook Iran’s preparations to attack Israel.
But given the evidence, it seems safe to conclude that the growing likelihood of a Harris presidency contributed to Monday’s selloff in stock prices. Clean up the scene for evidence Her footprints will be found everywhere.
