Former President Donald Trump historic guilty verdict Forged documents could increase market volatility, experts warn.
But that's not necessarily bad news for investors.
Ed Yardeni of Yardeni Research he told me on Yahoo Finance's 'Catalysts' which is an opportunity for investors to buy.
"Any sell-off in the market related to a geopolitical crisis or a domestic political crisis can actually turn into a buying opportunity," Yardeni said. "The market will continue to focus on the most important thing, which is the economy, and if politics affects that, it will obviously have an impact on the stock market."
Investors may be watching the soft market reaction on Friday and thinking that Trump's verdict doesn't matter. But the calm may not last long.
22V Research Senior General Manager Kim Wallace told me that as the elections begin to come into full view, the VIX, known as the fear gauge index, โwill likely receive a strong bidโ by mid-summer, as the market begins to give clues about how it will react to the various election results. .
For some perspective, Goldman Sachs strategists Dominic Wilson and Vickie Chang wrote in a recent note that during the previous two elections, the summer convention season โprovided one of the first broad market-moving events of the election cycle.โ โ.
The Republican National Convention will begin on July 15 in Milwaukee, followed by the Democratic National Convention in Chicago on August 19.
So far this year, the VIX has been muted. The CBOE Volatility Index closed below 12 for the first time since 2019 last month and remains well below its historical average of 19.9.
With about five months until Election Day, investors are starting to evaluate which candidate is the best stock.
The market appears to be cheering the likelihood of a Trump victory this fall, according to an analysis by LPL Financial chief technical strategist Adam Turnquist. The correlation between the S&P 500 and Trump's chances of winning the election has increased markedly in recent months.
By contrast, President Biden's election odds have maintained a negative correlation with the market since February.
Comparing investor sentiment to past performance, the market has historically fared better under a Democratic president. Ryan Detrick, Chief Market Strategist at Carson Group he told me earlier this year that the S&P 500 gained an average of 11.5% when a Democrat was in the White House, compared to 7.1% for a Republican.
According to industry experts, the main policy areas with implications for the market include fiscal policy, taxes and regulations, and geopolitics.
If campaign promises are any guide, a victory for President Biden in November will likely lead to greater investments in clean energy and manufacturing, expanded health care coverage, and lower prescription drug costs.
Potential policy changes that will boost the market under Trump include an extension of the 2017 tax cuts, promises to โfree up the production of domestic energy resourcesโ and plans to impose a 10% tariff on most imports and a 60% tariff on Chinese imports, which Wall Street and policy experts tell Yahoo Finance could worry markets and increase inflation.
โTrump is largely seen as the best candidate for markets because of his deregulation agenda, but there is real fear about what will happen from a trade policy perspective,โ BTIG policy research director Isaac told me. Boltansky.
Evercore ISI's Sarah Bianchi, who was deputy U.S. trade representative during the Biden administration, warns that the market has not yet priced in any โTrump 2.0 trade war risks,โ but this could change if he continues to lead in the polls.
"We believe Trump 2.0 would mean the return of trade-related market volatility and we wouldn't be surprised to see markets begin to price in some of that risk soon," Bianchi wrote in a note.
Regardless of who wins the election, billionaire Berkshire Hathaway CEO Warren Buffett is likely to focus on very long-term investments; The same goes for his son. Listen below to Howard G. Buffett on Yahoo Finance's 'opening offer'The podcast discusses his investment philosophy and his legendary father.
Sean Smith is an anchor on Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Advice on deals, mergers, activist situations or anything else? Send an email to seanasmith@yahooinc.com.
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