The markets today, Monday, can be expected to prove conclusively my contention that volatility is ‘the new normal’.
Viewed several hours before the opening bell, they look to start on a positive note with most major indicators in the green at time of writing, buoyed by U. S. President Donald Trump’s sudden drive by yesterday along with hopeful (though contradictory) reports of his condition.
Under normal circumstances these indicators can change during the runup to the opening bell and at any time afterwards.
It is possible that Trump’s illness will heighten market focus on the Vice-Presidential debate between Republican incumbent Vice President Mike Pence and Democratic challenger Kamela Harris scheduled for Wednesday evening. Some observers will be sizing up Pence and Harris on a ‘What if the worst possible scenario happens ...’ basis.
At time of writing it is reasonable to expect that today will be a very volatile day and that could be even more the case with vaccine and vaccine-related stocks. For one, Alex Gorsky, President and Chief Executive Officer at Johnson & Johnson has aggressively staked the company’s claim to leadership in the rush to bring a vaccine to market.
In the event that Trump is released today and rejoins the Presidential campaign, several possibilities seem clear at this time.
Some of the major technology stocks appear likely to face tax increases in a Joe Biden administration, possibly threatening their status as one of the main drivers of the market recovery. Biden has proposed raising the corporate tax rate to 28% from 21% and increasing taxes on foreign income of U. S. based multinationals. Those two measures together would reduce expected earnings of many major companies and could therefore reduce market enthusiasm for their shares.
While both parties and their leaders agree on the need for drastic action to combat the economic wreckage caused by the pandemic, they differ on what that action should be. President Trump has spoken in favor of “trickle-down economics”; --- that is, the belief that lower taxes on businesses and individuals will benefit the economy, a concept that underpinned his tax cuts.