Clinton’s New Email Scandal weighs on US Stocks
by, David Frank, Economist, Bullish University
Election angst as returned to Wall Street as yet another scandal is rocking the campaign of the Democratic Candidate for US President, Hillary Rodham Clinton. Elections are now one week away and the price in the markets did for a Clinton victory is eroding as polls are once again neck to neck.
Stocks held up nicely after the United States reported better-than-expected gross domestic product (GDP) growth for last quarter. The economy accelerated to its fastest pace in nearly two years. However, FBI Director James Comey and his announcement of a warrant obtained to look into a new batch of Clinton emails has rocked consumer confidence and brought back hopes of a Donald Trump campaign. This new look into her email server comes after a separate investigation into disgraced New York Congressman Gary Wiener brought new possible evidence to light.
There is now a chance of either a Clinton victory, which could lead to her immediate resignation, if she wins, or a victory for the wild card Donald Trump. A lose, lose situation for the US stock markets in the near term. US voters will enter the polls on November 8 to elect a president in a race that is all but undecided.
The Dow Jones which was up nearly 90 points before the news broke, closed down nearly nine points. All three major indices snapped a three month winning streak, as October came to a close yesterday. The indices were breakeven at close. Weighing on the markets this week will be the Federal Reserve interest rate decision as well as the October job report due out on Friday. There is also the release of the Fed’s favorite barometer of inflation, the PCE Inflator number.
On Friday, Comey sent a letter to lawmakers informing them that the FBI would review additional Clinton emails that turned up in the Wiener investigation. He stated that this “unrelated case” would attempt “to determine whether they contain classified information.” He also said that his agency “cannot asses” the new emails, at this time, to determine their “significance.” This will be a cloud over Clinton for quite some time as the FBI cannot tell how long their investigation will take.
US stock markets are now repricing election risk in light of this new email scandal against Clinton which has caused national polls to narrow significantly. Her win is not guaranteed. This is irking investors. Donald Trump, the Republican nominee, is view more skeptically by Wall Street because of his America First policy that could spark a number of trade wars which will hurt economic growth as well as the stock markets. Clinton, despite her calls to tax the wealthy and regulate business more is view more as the status quo candidate and markets like stability.
The markets are underpricing the possible chance of a Trump victory. This is a major market risk this political season. The other risk being a Democratic sweep of the White House and both chambers of Congress which will give that party a full mandate. Wall Street does like political standoffs as much as stability.
This re-emergence of Clinton’s email scandal will raise new questions about whether or not voters feel she is capable of sitting in the White House. Anything that calls into question a Clinton victory will lead to fresh market volatility. This volatility will abate as more information becomes known. As far as investors and The Street is concerned November 8 cannot come fast enough.
from Bullish University http://ift.tt/2fioVuV
No comments:
Post a Comment