Upcoming US election is creating much uncertainty. One of the biggest issues is not necessarily who wins but how the processes of government and overall economic stability play out.
What are peoples thoughts ? From this analysis one could expect major stock selloffs prior to the election simply from a cautionary approach.
Investors should prepare for worst over US presidential election
Nouriel Roubini
If result is contested it could drag on for weeks and trigger a major risk-off episode in markets
Opinion polls in the US have long
pointed to the strong possibility of a Democratic party sweep in the election on 3 November, with Joe Biden winning the presidency and Democrats gaining control of the US Senate and holding on to the House of Representatives, putting an end to divided government.
But if the election turns out to be mostly a referendum on Donald Trump, Democrats might win just the White House while failing to retake the Senate. And one cannot rule out the possibility of
Donald Trump navigating a narrow path to an electoral college victory, and of Republicans holding on to the Senate, thus reproducing the status quo.
More ominous is the prospect of a long-contested result, with both sides refusing to concede as they wage ugly legal and political battles in the courts, through the media, and on the streets. In the contested 2000 election, it took until 12 December for the matter to be decided: the supreme court ruled in favour of George W Bush, and his Democratic opponent, Al Gore, gracefully conceded. Rattled by the political uncertainty, the stock market during this period
fell by more than 7%. This time, the uncertainty could last for much longer – perhaps even months – implying serious risks for the markets.
If result is contested it could drag on for weeks and trigger a major risk-off episode in markets