The markets today, Monday, viewed several hours before the opening bell, look to start on a positive note, with major North American and British indicators in the green at time of writing while some European indices are in the red.
(These indicators can change during the runup to the opening bell and at any time afterwards.)
Last week included several heart-wrenching days and this week could possibly see more of the same. Look for a potential bump or dip if the market reacts to the Presidential Debate on Tuesday
And even after this week, it is possible that the dust will not settle shortly after the election. Certainly, there will be a stock-taking (no pun intended) of the outlook including the possibility of civil disturbances. And some will point out that historically markets settle after an election, but let’s consider what has happened in this particular contest. It started as a clash between President Donald Trump and former Vice President Joe Biden over trade, growth, and economic issues. It now (at time of writing anyway) centers more on the economic problems caused by the COVID 19 pandemic. To that add the bitter wrangling over the Supreme Court nomination and debates over how much government should – or even can – help their populations during the pandemic and we have a recipe for continued bitterness after the election.
And with that comes the possibility that market volatility might even become greater after the election, an outcome suggested by at least one analyst. At Wells Fargo Securities Michael Schumacher has suggested that volatility might jump, not diminish after the election.
“Normally, you might think that it’s Election Day or Election Day plus one that is super volatile,,” he said during a CNBC interview, adding that that will not be the case this time around.
“But this year, markets are saying ’Hey, wait a minute. We see a lot of vol after the election, he says.” If Schumacher’s analysis is correct the volatility won’t just affect the stock market but could push investors deeper into Treasuries in which they would trade off extremely low returns against the safe haven they provide.