Investors are bracing for a possible shakeup in the presidential race following President Joe Biden's prime-time speech. stumble in the debate last week. The concern: an unknown quantity at the top of the Democratic ticket should Biden drop out amid intense pressure from megadonors and rank-and-file members of Congress.
โIt's very hard to avoid the fact that President Biden no longer looks viable in this election,โ Kim Wallace of 22V Research. He told me on Friday Morning Briefing (video above) "The path forward is controversial for Democrats. Realistically, there is absolutely no way to do this smoothly, but they have work to do and they know it."
For investors who have seen the S&P 500 rise 15% this year, AGF Investments Greg Valliere warns A new candidate on the list could signal "volatility, instability, whatever" for a market in rebound mode.
Potential candidates proposed by sources to Yahoo Finance include California Gov. Gavin Newsom, Michigan Gov. Gretchen Whitmer, Pennsylvania Gov. Josh Shapiro, Commerce Secretary Gina Raimondo and former Secretary of State Hillary Clinton .
Among the names being discussed, Renaissance Macro is Steve Pavlick told me that Vice President Kamala Harris and Secretary of Commerce Gina Raimondo They are among the names that can be viewed favorably in a nervous market.
"If you operate under the view that markets don't like uncertainty, there is a case where Harris could be seen as a continuation of President Biden... there is clarity from a political perspective," Pavlick said.
Pavlick added that Commerce Secretary Gina Raimondo, who has been front and center in the Key Biden legislation, such as the CHIPS Actโ is perceived positively by businesses and has the potential to win over Silicon Valleyโs group of wealthy donors.
"A lot of companies like it... and it's obviously good for semiconductors and the technology sector," Pavlick said.
Regardless of whether President Biden steps aside or not, investors should prepare for a bumpy ride in the coming months as professionals warn that uncertainty surrounding elections typically leads to heightened market volatility.
State Street Senior Global Macro Strategist Marvin Loh told me Political uncertainty, including the chances of another Democratic candidate, will boost the term premium in the Treasury market. The term premium is the additional yield that investors expect to receive for holding longer-term bonds rather than shorter-term bonds.
"There will be volatility in certain sectors that might benefit from one candidate's policies over another's," Loh said.
But that additional volatility may not appear until the fall, as Election Day approaches.
Co-Chief Investment Officer, Truist Keith Lerner A recent note highlighted that volatility generally increases closer to election day.
"As investor anxiety rises and uncertainty increases, market volatility tends to increase in October and then historically tends to retreat once there is clarity on the winner (regardless of who wins)," Lerner wrote .
While the outcome of the 2024 election is highly uncertain, one thing is clear: investors should prepare to re-examine and adjust their investment portfolios to appropriately manage risk.
Investors aren't ready to throw in the towel on AI trading just yet in the face of fresh presidential election uncertainty, Goldman Sachs Asset Management portfolio manager Brook Dane told Yahoo Finance Executive. Brian Sozzi about his 'Opening offer' podcast. Listen below.
opening offer List of episodes
Sean Smith is a news anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmithDo you have suggestions on deals, mergers, activism situations or anything else? Send an email to seanasmith@yahooinc.com.
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