CNBC reported early today: Not only does Biden not plan to drop out, Biden remains committed to a second debate in September, citing an advisor. Other reports say that there is no pressure coming from his cabinet to resign.
To be clear, the decision is his alone and to get a viable candidate, VP Kamala Harris would also need to drop out. That doesn’t look like it will happen and the market is betting it leads to a strong Republican sweep of the House, Senate and White House.
Previously, there were lots of scenarios where Trump could win but lose the House or win it with only a few seat majority. Similarly, he could only have 1 or 2 extra votes in the Senate.
Instead, if Biden and the Democrats are wiped out, that would leave Republicans without opposition and that would clear the way for corporate tax cuts, deficits and strong regulatory changes. Now it might also lead to some real trade uncertainty but if you look at the broad Republican agenda, it’s certainly pro-stock market and I’m not sure you would want to price in anything else, at least at this point. However if you do, here are 7 concrete trade ideas from Jim Cramer if Trump wins.
To be fair, there are many cross-current here including good inflation numbers in both the PCE report and UMich inflation expectations. There is also the usual month-end uncertainty and positive July seasonals.
But I take it at face value as the S&P 500 climbs above 5500 for the first time.
This article was written by Adam Button at www.forexlive.com.
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