Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

How’s the US Presidential election trading now? Piper weighs in

Published 2024/05/29, 18:54
© Reuters
US500
-

 With the 2024 US Presidential election approaching, Piper Sandler has examined how market perceptions of the outcome are influencing financial asset prices.

The analysis provides some interesting results, although it comes with notable exceptions and caveats.

Piper Sandler gauged the responses of 34 assets to a potential Biden victory. They found that energy and certain commodities, like gold and silver, have positively correlated returns with the perceived odds of an incumbent victory.

Interestingly, the firm noted a reduced indication that "duration, pot, and pesos" would be the preferred trade if Biden is re-elected, suggesting that common investment themes may not trade as consistently as the campaign progresses.

Based on estimates of asset class performance through recent market closes, Piper Sandler identified a long-short portfolio that maximizes expected returns assuming a Biden win.

This portfolio is long on energy, silver, and gold, while being short on tech stocks, 10-year U.S. Treasuries, health, and consumer discretionary stocks. This portfolio configuration yields a beta to the S&P 500 of zero.

However, the firm cautions that these results rest on strong assumptions and imperfect metrics.

Despite the inherent limitations, Piper Sandler said that controlling for key variables, it estimates the S&P 500 will rise by 3.1% if Biden wins and fall by 1.8% if he loses.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.