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Does the stock market traditionally drop around election time? Uncertainty is usually bad for the market, yeah?
by SeanAnderson 10y ago
Does the stock market traditionally drop around election time? Uncertainty is usually bad for the market, yeah?
- kasey_junk 10y agoThis kind of swing implies the outcome is unexpected and not well thought of.
- CydeWeys 10y agoNo, it doesn't traditionally drop -- it only drops when the "wrong" candidate wins (as determined by who the markets would prefer). It dropped because Trump's stated economic, trade, and diplomatic policies are anti-globalization and would be bad for business. The markets were riding lower for weeks on fears of Trump winning, then recovered yesterday when Hillary had that final uptick. Now they've lost all that and then some.
- gigatexal 10y agoThe vix shot up when Obama was projected to win
- brianlash 10y agoI'll be very interested to see whether this interpretation comes to bear. The more likely explanation, I think, is that something unexpected is happening, and markets don't like uncertainty. A little reductionist? Maybe. But maybe not.
- throwaway5752 10y agoNo. This is thoroughly uncharted territory. I guess a lot of ignorant, complacent people will see how important being a global reserve currency is to a national economy.
- slv77 10y agoBeing a global reserve currency is a boon during periods of inflation and a drag during periods of deflation. Given the economic environment since 2008 countries central banks have been fairly aggressively trying to weaken their currencies to stoke inflation and the "benefit" is more a "burden". The loss of our reserve status and the gradual divestiture of USD assets by foreign central banks would have the impact (if gradual) of raising long term borrowing costs, lowering asset prices and increasing wage pressures. Those effects would be uneven across the economy and benefit some people at the expense of others. Generally helping the factory working I Ohio and hurting those who own highly leveraged assets (like US stocks). Most of the benefits of the USD simply accrue because of the size of the US economy which tends to make it less volatile and less prone to "runs" on the currency. Even if the world were to panic about the direction of the US political system there simply isn't anything else big enoug to run to that would seriously tank the dollar. The same cannot be said for the political developments in a counrty the size of Venezuela. These benefits are independent of the reserve status and accrue to the Euro just as much as the USD.
- throwaway5752 10y agoBelieve what you want. Bad times are coming, prepare accordingly. edit: and let me clarify, because you misunderstand me. The size of the US economy is one thing, but the stability of an ally's political system and leadership is another. The UK and the US have taken hits that will play out over a long term and are not easily reversible, at a time when the alliance has serious challenges and very capable adversaries.
- slv77 10y agoCompletely understand the benefits of greater global integration including the reduced likelihood of WWIII breaking out but the USD acting as one reserved currency isn't one of them in a deflationary environment isn't one of them.
- deleted 10y ago[deleted]
- fny 10y agoYes. "Dow Jones’s data team says the average change on the day after Election Day is negative 0.9%, with the top 5 declines arriving in the wake victories by Democratic presidents." Although, the drop we're currently seeing is pretty hefty. [0]: http://www.marketwatch.com/story/how-the-stock-market-tends-to-perform-on-and-after-election-day-2016-11-07 http://www.marketwatch.com/story/how-the-stock-market-tends-...
- daxorid 10y agoNo. The unproductive, rent-seeking portion of the economy is threatened by the prospect of an administration that promises to promote production and punish rent-seeking.