It’s finally Joe-ver, as we say Bye-den to the 46th President, and hello (presumably) to Kamala Harris, who is now likely to be the Democrat nominee for November’s election, following and endorsement from President Biden after dropping out of the race.
Setting the puns to one side, the news is, largely, as had been expected – after much pressure, and the disastrous debate performance at the end of June, Joe Biden has declined the Democratic nomination, and dropped out of the presidential race. While it remains to be seen how the nominee will now be decided, Biden’s endorsement, as well as that of a host of other lawmakers in Congress, leaves VP Harris in pole position to sit at the top of the ticket come polling day.
Of course, this raises many questions as to the political, macroeconomic, and market, impacts of what is, in modern times at least, an unprecedented action from a sitting President. As an initial playbook, in the day or so following Biden’s announcement, and as the dust settles, the below seems a logical framework:
Of course, this all references the knee-jerk market reaction to the latest headlines. In the longer-run, focus will naturally fall on the chances of each candidate of winning the election, which will likely be one of, if not the most, significant market drivers into the autumn.
On the whole, though, if the last week has taught participants anything, it is that anything really can happen in the world of politics. There is still a long way to go until polling day in November and, with the race now much more open than it was before, expecting the unexpected is likely to be a prudent strategy, probably leading to structurally higher vol over that period too.
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