During a press conference in Washington D.C. on July 11, 2024, President Joe Biden addressed increasing speculation about his potential withdrawal from the presidential race. This speculation has been intensifying over the past few weeks and gaining even more momentum in recent days, potentially impacting the economy.
Political Pressure Mounting
According to CBS, 20 House Democrats and two Senate Democrats have publicly urged Biden to step down. Behind closed doors, influential party leaders like former Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer, and House Democratic Leader Hakeem Jeffries have also discussed the matter with the President, as reported by The Hill.
Adding to the pressure, a recent survey conducted by the AP-NORC Center for Public Affairs Research on July 17 revealed that 70% of adults, including 65% of Democrats, believe Biden should withdraw and allow the party to choose a different nominee.
Economic Ramifications
Should Biden decide to withdraw, the financial markets are expected to experience increased volatility. Josh Thompson, CEO of Impact Health USA, noted that investors typically prefer stability, and such a significant political change would disrupt this, potentially leading to a sharp decline in stock prices as investors seek to hedge against potential risks.
Michael Collins, CFA, founder and CEO of WinCap Financial, echoed this sentiment, suggesting that Biden’s withdrawal would almost guarantee a win for Trump, adding further uncertainty and volatility to the markets.
Support for U.S. Equities
In specific sectors, Biden’s exit could bolster U.S. equities. Timothy Holland, CFA, Chief Investment Officer at Orion, explained that if Biden’s most likely replacement is perceived as a weaker candidate against Trump, it could support U.S. equities. Wall Street might anticipate and price in fiscal policies that include extending the Trump Tax Cuts and increased government spending, particularly on the military. This could stimulate the U.S. economy and boost corporate profits in the short to intermediate term.
Stephanie Vaughan, co-founder of Veda, supported this view, suggesting that a Biden withdrawal could positively impact the U.S. equities market, especially if the Democrats struggle to present a strong alternative candidate against Trump.
Impact on Safe Havens
Peter C. Earle, senior economist at the American Institute for Economic Research, highlighted that the uncertainty surrounding Biden’s replacement would likely drive investors to seek safe havens such as gold and silver until the new candidate’s policies become clearer.
Bond Market Reactions
Timothy Holland noted that bond yields could rise and bond prices could fall in response to a potential Republican Election Day sweep and the continuation of policies like the Trump Tax Cuts. A Biden withdrawal could trigger a similar reaction in the bond market.
Crypto Market Rally
Veda’s Vaughan predicted a rally in the crypto markets if Biden drops out, citing a more favorable environment for the crypto ecosystem under a Trump presidency.
In summary, President Biden’s potential withdrawal from the presidential race is creating significant uncertainty, with potential ramifications across various financial sectors. Markets are bracing for volatility, and investors are keenly watching the political landscape for further developments.
by Steve Macalbry
Senior Editor,
BestGrowthStocks.Com
Disclaimer: The author of this article is not a licensed financial advisor. This article is intended for informational purposes only. It should not be considered financial or investment advice. We do not hold any form of equity in the securities mentioned in this article. Always consult with a certified financial professional before making any financial decisions. Growth stocks carry a high degree of risk, and you could lose your entire investment.
