The US election is at it again and it promises to be a bumpy ride! From Bill Clinton to Joe Biden, the Democrats certainly can’t be forgiven for their more recent track record of selecting presidential candidates. Unfortunately, given what Biden has suggested on policies which he would like to implement, the market sees more questions than answers. Needless to say, he doesn’t strike a great deal of confidence as the alternative to Donald Trump.
It’s hard for people to sieve through the “Trump rhetoric” that employs psychology, mentalism and doubt to manipulate opinions, however, what do the numbers suggest? The charts below show the comparison between the Barack Obama and Trump presidencies through several important metrics that are often used in political rhetoric.
US Quarterly GDP (growth rate)
US unemployment rate
US balance of trade
S&P 500 performance 2006/10/07 – 2020/10/07
Source: Trading Economics
US consumer sentiment 2006/10/07 – 2020/10/07
We can see that Trump has been a beneficiary of a growing US economy and a declining unemployment rate which continued through to the end of 2019. The coronavirus has created an extremely difficult environment for economies around the world. The next US president has an extremely tough job ahead of them over the next presidential term. This fact is well known to the market and thus it’s prudent for investors to be mindful of the risk of increased volatility in the fourth quarter of 2020.
Regardless of who emerges triumphant as the next US president, markets will digest the news and forge ahead as they have always done.
“Using volatility as a measure of risk is nuts. The risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate returns.” Charlie Munger – Berkshire Hathaway