Steve Cummings
Wealth of Geeks
Wealth of Geeks
Vice President Kamala Harris has enough pledged delegates at the upcoming Democratic National Convention to now be considered the presumptive 2024 Democrat Party presidential nomination. Her ascension to replacement for incumbent President Joe Biden sparked relief among Democrats, though it spreads uncertainty for the United States economic outlook.
Jeff Sommer says in his “ Strategies “ column for the New York Times how a stronger Democrat selection also presents a temporary headache for some traders and investors. Those who thought former president Donald Trump would easily overcome an expected Biden rerun must now reassess their plays.
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Sell in May and go away
“Ignoring both politics and the markets is clearly not feasible this summer,” says Sommer. “But as far as investing goes, quick trades are hazardous, and I think most people would be better off at the beach.” He recalls his father’s investment advice as a child: sell before summer and forget about investing for the season, especially during an election year.
Aimee Picchi of CBS Moneywatch says that Wall Street has been watching Trump’s rise in popularity. This relationship is evident in what has become known as the “Trump Trade.” Before Biden’s announcement, Trump was running away in the polls. This strength influenced investments that might thrive with a Trump administration, she writes, “ranging from cryptocurrencies to energy stocks.”
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A new era for bitcoin
Trump’s entrance into the cryptocurrency conversation is now official. Just days after Biden’s announcement, Trump made his own: he would address the Nashville Bitcoin Conference on July 27. The news excited crypto fans, especially crypto trading platform Coinbase, which published its reaction.
“It’s finally here: (the) President Donald Trump Bitcoin Conference Speech Eve [sic],” Coinbase’s website says. The announcement came with unveiled optimism that a former U.S. President would be giving a keynote address for the first time. Following Trump’s speech a few days later, Bitcoin marched toward $70,000, reports the Wall Street Journal.
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Harris is changing heart on crypto
Such platitudes have been non-existent for presidential hopeful Harris, who was criticized by the cryptocurrency media.
Harris had not made her thoughts clear on the crypto question, though Bitcoin Magazine’s CEO David Bailey doesn’t agree. In a post on X (formerly Twitter) Bailey alleged Harris told an unnamed Democrat party donor Harris called Bitcoin “money for criminals.”
Nonetheless, The Financial Times reports Harris’ camp has since reached out to crypto company heads to pledge a “reset.” This comes after a recently cold relationship between the crypto sector and the White House beset with antitrust issues.
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In the blue corner
Shortly after the nominee switch, the Associated Press (AP) News published a review of Democratic Party nominee Kamala Harris’ chances in the upcoming 2024 U.S. election. Harris faces stiff competition from Donald Trump, whose recent assassination attempt in Pennsylvania galvanized his public appeal even further. The nominee elect might struggle to compete with Trump’s persona and snowballing movement, but she holds an ace up her sleeve.
Some might say Biden failed to capitalize upon his recent performance, driven mostly by his policies. Harris now has a chance to use certain parts of their record to her advantage. AP News’ Christopher Rugaber writes, “President Joe Biden’s third year in office was dogged by political gridlock yet blessed by an economy that refused to break.”
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A checkered economic story
Bloomberg opinion columnists further reflected on how the Biden administration must be assessed on key metrics, such as:
• Healthcare Reform: The number of Americans who gained health insurance went to 95% — it was near 88% when he took over.
• Salary Increases: Biden oversaw record numbers of jobs created, albeit with rampant inflation, negating many gains. What’s more, in 2023, income growth began to outpace inflation.
• Unemployment: Unemployment has dropped to around 4% during Biden’s tenure. It also fell near this mark under Trump until the pandemic, according to Statista.
• Cost of Living: The consumer price index (CPI) has fallen since record highs of 9% after a year of Biden. Conversely, it had never fallen below that during Trump’s time in office.
• Household Income: American families have grown richer since 2020. Reuters notes the U.S. household net worth was at $156 trillion in Q4 of 2023, compared to $131 trillion in 2020. Of course, the Covid-19 pandemic affected these conditions.
Less Inequality: Alison Schrager suggests that inequality narrowed in 2023. “Lower-income workers saw gains, while median and higher earners saw barely any increase at all, after accounting for inflation,” she writes.Immigration: Biden issued over 500 executive orders on border policies, though he faced political gridlock with his approach. A recent Gallup poll ranks immigration as voters’ chief election issue.
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What’s next?
Nobody can be sure how much Harris will reflect her predecessor or whether she will pursue her previously known platform. For example, she may or may not stand behind Biden’s pledge not to tax earnings less than $400,000.
As the emergent Harris spreads uncertainty, the S&P 500 may get turbulent for a short period. This hasn’t happened yet, though a Goldman Sachs video posted in July claims it may be a “false sense of calm.” It could mean an unpredictable market in the coming months
“We’ve seen the assets managed by systematic options funds rise substantially,” says equity executions professional Brian Garrett. He confirms that this usually means market-making buyers will “hedge exposure” by selling a rising index and buying a falling one.
It could eventually lead the market into more volatile territory, though right now, it remains under the surface. “(It’s) one reason why we’ve seen the S&P relatively quiet, while there have been large moves in individual stocks,” Garrett explains. Goldman Sachs is still upbeat on the U.S. economy, predicting 2.5% real income growth for the last six months of 2024.
Adding more insight is Chief Investment Officer Americas at UBS Global Wealth Management, Solita Marcelli. She posted late last year on LinkedIn how geopolitical instability might slow growth, so investors should focus on asset class and quality.
Positives come from the new opportunities in the tech sector, namely artificial intelligence (AI). “We believe artificial intelligence will spur value creation across a wide range of sectors.” writes Marcelli.
