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Worried about Biden and Trump wreaking havoc on your portfolio? There’s nowhere to hide!
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I’ve always found it fun to put stock market perspectives into the context of personal life experiences.
And I have a new one to share with you dedicated Morning Summary readers of today.
As I ran outside on July 4 in 90-degree weather and barefoot shoes as part of an obsessive exercise routine, I had some fleeting thoughts about where things are headed in the run-up to the November presidential election.
The prospect reminds me of those childhood days when I would do something bad, and my dad would try to discipline me. I would always run to the closet and close the door, somehow reasoning that he wouldn’t find me there near my Transformers and Teenage Mutant Ninja Turtles toys.
Time and time again, I was wrong—he found me, and I learned in those moments that there really was nowhere to hide.
That’s what investors are facing in the run-up to the presidential election, professionals say.
“My simplistic answer is that the US is so oversized and huge that if the US doesn’t work [around the election]there are very, very few places to hide,” Bradesco’s head of equity strategy Ben Laidler told Yahoo Finance’s Initial bid podcast (video above or listen here).
Laidler added: “I can think of one or two. Maybe China is one of them. But, you know, there are very few places to hide.”
This actually makes a lot of sense to me.
You will withdraw 50% of your super profitable Nvidia (NVDA) position until the end of the summer and go all in on Europe with the view that it will be less volatile? Let’s go.
The European Union’s Q1 GDP increased by a paltry 0.3% quarter-on-quarter. Q4 GDP was revised down to negative 0.1% from 0% previously. The EU was in a technical recession in the second half of 2023!
No real acceleration of growth in the EU is expected from here.
EU inflation remains pervasive, prompting ECB President Christine Lagarde to back off expectations for another interest rate cut this year. The ECB delivered its quarter-point cut at its June 6 meeting.
The conclusion is that Europe lacks catalysts.
Let’s take a brief look at China.
China’s first-quarter GDP grew 5.3%, but investment in property and enterprises plunged 9.5%. An industrial CEO recently told me he doesn’t expect his business in China to grow until the end of 2025.
A former senior member of George W. Bush’s Cabinet detailed a recent trip to China to me a few weeks ago. They were struck by the negative tone among Chinese consumers and fear a surprising economic downturn lies ahead due to strained household budgets.
The story continues
All of this aligns with poor sales in China recently, from consumer giants Nike (NKE) and Levi’s (LEVI).
So China and Europe are out of the question.
“We have already seen sharp market reactions to elections in India, Mexico and France,” said Truist’s co-chief investment officer. Keith Lerner reminded customers in a note.
Here’s what happens to these countries.
Perhaps bitcoin will recover from its latest sell-off and leverage a pre-election bid as a hedge against rising deficits that undermine the credibility of the US dollar.
But who knows.
“The election is one ingredient in this wall of concern that I think the market will continue to climb, along with inflation and recession fears,” Laidler added.
Not at all comforting.
Just like I did as a kid, you’re going to have to absorb any pain in the markets brought by the Biden vs. Trump chaos. The reality is, there’s nowhere to hide.
The long-term uptrend in markets remains intact, Wall Street’s “Einstein” said. Pedro Tuchman. Listen below to what he told me in Initial bid.
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