Why Trump, Hillary Will Not Take Down the Market

In this election cycle, will investors be winners or losers? Let’s just get this out of the way: the bulk of this year will be consumed by election noise. There is no way around that. That noise, in turn, will drive out other stories, unless there is a major disruptive event (a terrorist attack, such as the recent one in Brussels, a natural disaster, unexpected political upheaval in the world, or expectations of a possible Brexit coming to fruition). That noise also will subtly influence investors’ behavior, or at least how they view the world. There is no way to avoid that.

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An Economy of Chicken Littles

The “nattering nabobs of negativism” (a phrase we have to thank Spiro Agnew for, via William Safire) are out in full force again in the financial and pundit world. While there was only occasional mention of the economy during the Republican debate last week, both the GOP contenders and market mavens seem to agree that the world is going to hell. They have different reasons: The Republicans think the world has become dangerously unstable and that Obama is a cause. Investors, who have pushed global financial markets sharply lower (the S&P 500 is now down almost 10 percent since January 1) to the worst start to a year ever, see the root cause as heedless central banks, a U.S. economy grinding to a halt, and a collapsing debt-laden China.

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