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I always find it interesting to place stock market outlooks in the context of personal life experiences.
And today I want to share a new article with all of you loyal Morning Brief readers.
On the Fourth of July, I was running barefoot outside in 90-degree weather as part of my obsessive training regimen, and my thoughts wandered to how the stock market would perform leading up to the presidential election in November.
This mindset reminds me of when I was a kid and my dad would try to punish me for doing something wrong. I would always run to the closet and close the door, somehow thinking he wouldn’t notice me standing next to his Transformers and Ninja Turtles toys.
So many times I was wrong, he found me and in that moment I knew there was really nowhere to hide.
Experts say that’s exactly the situation investors are facing ahead of the presidential election.
“My simple answer is that the United States is so big and so massive that if the United States doesn’t work, [around the election]”There are very few places to hide,” Ben Laidler, head of equity strategy at Bradesco, said on Yahoo Finance’s Opening Bid podcast (watch the video above or here).
“I can think of one or two – maybe China is one – but, you know, there aren’t many places to hide,” Laidler added.
This really makes sense to me.
Are you going to cash out 50% of your ultra-profitable Nvidia (NVDA) position by the end of the summer and then invest all of it in Europe where you see lower volatility? Sure.
European Union (EU) Q1 GDP grew by just 0.3% quarter-on-quarter. Q4 GDP was revised down to -0.1% from the previous 0%. The EU has entered a technical recession in H2 2023!
Going forward, we cannot expect any real acceleration in growth in the EU.
Inflation remains rife in the EU, and ECB President Christine Lagarde has downplayed the prospect of further rate cuts this year. The ECB cut interest rates by 0.25 percentage points at its June 6 meeting.
The point is that Europe lacks a catalyst.
Let’s take a quick look at China.
China’s first-quarter GDP rose 5.3%, but investment in real estate and development fell 9.5%, and the CEO of one industrial company recently told me he doesn’t expect his business in China to turn around until the second half of 2025.
A few weeks ago, former senior officials under President George W. Bush spoke to me at length about their recent visit to China, where they were surprised by the negative attitudes of Chinese consumers and worried about future economic downturns due to strains on household finances.
The story continues
All of this coincides with recent slump in sales in China for consumer goods giants Nike (NKE) and Levi’s (LEVI).
That means China and Europe are excluded.
“We have already seen strong market reactions to the elections in India, Mexico and France,” Truist co-chief investment officer Keith Learner said in a client note.
That’s all for these countries.
Perhaps Bitcoin will shake off its recent sell-off and gain traction ahead of the election as a hedge against ballooning budget deficits that are undermining the credibility of the U.S. dollar.
But no one knows.
“The election, along with inflation and recession fears, is one factor that will add to the wall of fear that the market will continue to rise,” Laidler added.
That’s hardly any consolation.
Just like when I was a kid, you will have to endure the market pain brought on by the Biden vs. Trump chaos. The reality is, there is no place to hide.
Wall Street’s “Einstein” Peter Tuchman said the market’s long-term bullish trend remains strong. Listen to what he said in the opening bid below:
You can find more episodes of Opening Bid on our video hub, on your favorite streaming service, or listen and subscribe on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
For in-depth analysis of the latest stock market news and events that are moving stock prices, click here.
Read the latest financial and business news from Yahoo Finance
