Did you know that in 2020, global stock markets saw unprecedented volatility due to a mix of political and economic factors?

The stock market  still managed to recover and reach new highs by the end of 2020, and this year isn’t likely to be any different.

Here’s a snapshot of what you’ll find in today’s edition:

• Presidential Clash Incoming: First, as Biden and Trump prepare to face off in tonight’s debate, all eyes are on potential gaffes and their implications 🎤

• Should We Expect Election Time Volatility? Next, we’ll explore three main concerns investors have about election outcomes 🤔

• Oil Prices Surging Back: Finally, we look into the reasons behind the recent oil price hike and assess the potential impacts on the global economy 🛢️

Stay informed and ahead of the curve with our expert analysis. Happy trading!

Presidential Clash Incoming 🎤

The debate between Biden and Trump takes place tonight.

Be prepared for fireworks.

The most interesting part of the debate will be to see if there are any major gaffs by either one 😵‍

Biden, of course, will be the one most at risk of stumbling.

In the debates of 2020 as well in his State of the Union speech a few months ago, Biden managed to exceed expectations in terms of energy level and mental clarity, perhaps with some assistance from a substance or two.

No market impact is expected from a debate, but it will be interesting to monitor polling data in the days following 📊

National polls show the race as a dead heat, even though at the electoral level, Trump seems to be comfortably ahead.

Should We Expect Election Time Volatility? 🤔

Many investors and strategists point to presidential elections as a major risk for the stock market.

There are three possibilities for why the election might cause a market sell-off.

One possibility is that investors fear the policies of Biden or Trump.

The second possibility is that investors fear a contested election where no winner will be declared for some time and markets go through a period of uncertainty.

The third possibility is that the losing side refuses to accept defeat and street protests cause financial markets to unravel.

Let’s tackle each risk and see if it should really be a cause for concern 🔎

First, should investors fear the unknown of a Biden or Trump Presidency?

Investors have already lived through both, and even if you cannot stand either man and his policies, the markets rallied under both and set new highs under both.

So we already know there is little to fear of a Trump presidency or a Biden presidency when it comes to the stock market 😌

Second, even if we end up with a contested election, it wouldn’t be the first time.

We have institutional procedures that have been capable and are capable of resolving such disputes.

Even if it takes a while to resolve, we know we will end up with either President Trump or President Biden, so even in the uncertainty of waiting for a resolution, there would still be plenty of certainty 👍

Third, yes, protests are possible.

But since 2020, this country has had plenty of protests and the impact on the financial markets has been zero.

If protests happen again the impact will be zero.

Why?

Because productive members of society need work and if a few unproductive, angry members of society want to take to the streets for a protracted period of time, let them have at it.

They probably don’t work anyway, so their actions may be unpleasant, but they won’t disrupt the economy or the financial markets 📈

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Oil Prices Surging Back 🛢️

After falling from the upper $80s to the upper $70s, Brent crude oil prices are now back to $85 per barrel.

Fears of escalation of war between Israel and Hezbollah in Lebanon are the major reason for the recent rise.

Even with the current price spike, oil prices are just back to where they were a few weeks ago and are not near levels that would disrupt the economy or lead to renewed inflationary pressures.

But the threat of an escalation of war is real in the Middle East 😧

Nevertheless, even if an all out war breaks out between Israel and Hezbollah in the coming weeks, which is not my expectation, oil production is not likely to be disrupted.

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