Jason Katz, Managing Director and Senior Portfolio Manager at UBS, explains what would happen to the markets if a Republican is elected US president.
Former President Trump has officially secured the Republican nomination, with Senator J.D. Vance as his running mate.
The Republican senator from Ohio, a former Marine, private equity veteran and best-selling author who was turned into a Netflix special, was nominated on Monday, two days after narrowly escaping an assassination attempt during a rally in Pennsylvania.
“Before this horrible event happened, the market was already sniffing out a Trump victory after the debate. What are investors sniffing out now? A Republican landslide victory,” Jason Katz, managing director and senior portfolio manager at UBS, said on “Bernie & Co.”, predicting what will happen if the Republican candidate wins the White House. “The 2017 tax law will be made permanent, and we will likely see additional tax cuts. Misguided regulations will be significantly reduced and we could see a significant increase in M&A activity,” Katz elaborated.
Elon Musk praises Trump’s running mate J.D. Vance
On the first day of the 2024 Republican National Convention at the Fiserv Forum in Milwaukee, Sen. J.D. Vance and his wife, Usha Chirukuri Vance, congratulate President Donald Trump on being nominated for vice president. (Anna Moneymaker/Getty Images/Getty Images)
Fed Chairman Powell condemns assassination attempt on Trump: ‘Sad day for our country’
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| Me: DJI | Dow Jones Average | 40211.72 | +210.82 | +0.53% |
| SP500 | S&P 500 | 5631.22 | +15.87 | +0.28% |
| I:Comp | Nasdaq Composite Index | 18472.565651 | +74.12 | +0.40% |
The Dow Jones Industrial Average rose 6.7% this year to close well above 40,000, a new record, on Monday. The S&P 500 is up 18% this year to just shy of its all-time high, while the tech-heavy Nasdaq Composite Index rose 23% to close just below the record it hit this month.
With the Republican National Convention underway, investors will be closely watching the details of whether the GOP’s policy platform can maintain stock market momentum.
Speaking at an Ameriprise virtual roundtable with FOX Business titled “How Will the Election Affect Markets?” in late June, Anthony Sagrimbene, chief market strategist at Ameriprise Financial, said investors could be exposed to further volatility through November.
““As markets begin to disregard not only the White House but also control of Congress, we could see a period of volatility. But historically, volatility returns to more normal levels after Election Day, whatever the outcome of the election,” he said, and then investors turn to fundamentals. “The level of interest rates, the growth rate, corporate earnings and, of course, the trajectory of monetary policy — those are the four things that generally move the market,” he said.
Republican presidential candidate Donald Trump is hurriedly escorted off the stage during a rally in Butler, Pennsylvania, on July 13, 2024. (Anna Moneymaker/Getty Images/Getty Images)
The team was unable to comment on whether there would be any impact on the markets or the election following the weekend assassination attempt on President Trump.
The Fed doesn’t need to wait to cut rates
Outside of the upcoming election, a tailwind for the economy is brewing: Federal Reserve Chairman Jerome Powell said Monday that policymakers are seeing positive inflation data and don’t necessarily need to sit back and wait for inflation to reach its desired target level.
Federal Reserve Chairman Jerome Powell (Kevin Dietsch/Getty Images/Getty Images)
“What that means is that if you wait until inflation gets down to 2 percent, you’ve probably waited too long, because the tightening, or the level of monetary tightening that you’re having, is still affecting inflation and probably will drive it below 2 percent,” Powell told attendees at the Economic Club of Washington, D.C.
The Consumer Price Index fell 0.1% month-on-month in June, the first monthly decline since May 2020. It still remains 3% higher than a year ago.
Currently, 89% of market participants are pricing in a rate cut in September. CME’s FedWatch ToolA gauge of interest rate movements. No action is expected at the July meeting.
Ameriprise chief economist Russell Price expects one rate cut in September and another in December, but says the health of the U.S. consumer is the bigger driver of the economy.
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“The consumer is really the most important thing. Consumer spending has calmed down a little bit. In my opinion, the consumer is still doing well. But the consumer is getting a little stale in terms of how much they spent on goods a few years ago and how much they spent more recently on services like travel and vacations. But in general, the consumer is [in] “The financial situation is good,” he noted.
