It looks like Hillary Clinton is going to be the next president and the market has reacted positively. Here are a few thoughts on how this is working out and how to make a profit in stocks as the presidential election campaign winds down to a welcome close.
The reason that U.S. presidential candidates always move politically toward the center as the election approaches is because it works. Each party has its base of ardent supporters but not enough people to win the election. The winner is the candidate who convinces the vast undecided middle of the U.S. political spectrum to vote for them and who keeps their base energized enough to get out and vote. The problem for Donald Trump is that with questions arising about his business acumen ($1 billion dollar business loss in one year) and his morals (bragging on tape about unsolicited sexual advances on women) he has retreated to the attack, slash and burn, mode that is popular with his base but is offensive to virtually everyone else. Take a look at the odds reported in the New York Times “Upshot” page and their “Who Will Be President” page.
The Upshot’s elections model suggests that Hillary Clinton is favored to win the presidency, based on the latest state and national polls. A victory by Mr. Trump remains quite possible: Mrs. Clinton’s chance of losing is about the same as the probability that an N.F.L. kicker misses a 36-yard field goal.
In the last couple of weeks Mr. Trumps odds of winning have gone down from about one in three to one in six or worse and the market has gone up. Our point is not to argue the pros and cons of either candidate’s positions or defend or attack either candidate. Rather our point is to ask if stocks will continue to rise as Trump goes down in flames, perhaps taking a Republican Party in both houses of congress with him.
Stocks Are Up Post Debate
Reuters reports that U.S. stocks gain on Clinton’s debate performance.
U.S. stocks strode higher on Monday, buoyed by the perception that Hilary Clinton won the second U.S. presidential debate and by a surge in oil prices, while sterling was under pressure on concerns Britain will make a hard exit from the European Union.
A poll taken by CNN immediately following Sunday night’s debate showed viewers said Clinton had beaten Donald Trump, 57 percent to 34 percent.
“The broader market is responding positively to the events over the weekend that make Clinton more likely to win,” said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.
Investors see a Democratic Clinton administration as more predictable than one led by Trump, who has provided less detail about his plans and raised fears of market volatility around his candidacy, Meckler said.
As the election campaign winds down to close it would appear that Mr. Trump is going to retreat back into his base and fail to contest the middle ground. This will make him fall even further in the polls and will hearten the market which likes predictability. Take a look at what a Clinton presidency would mean for stocks.