The Briefing Trader Election Playbook SPEAKERS:

Transcript:The Briefing Trader Election Playbook SPEAKERS::
The Briefing Trader Election Playbook SPEAKERS: Gavin Maguire, Senior Equity Analyst EventTrader – (EVENT) Gavin Maguire- EVENT Trader (EVENT) Introduction Looking at the elections and the impact on your portfolio. - Historical moves around elections - Candidates and the Platforms - Verticals - Plays Gavin Maguire- Event Trader (EVENT) Election Cycles Presidential, Parliamentary, and Legislative elections create uncertainty: Economy (Policies, Trade, etc) Markets (Regulations, Capital Gain Taxes) Social (Taxes, Healthcare, Judicial System) Markets During Election Years ‘We are pattern seekers, believers in a coherent world, in which regularities appear not by accident but as a result of mechanical causality or someone’s intention… when we detect what appears to be a rule, we quickly reject the idea that the process is truly random’- Daniel Kahneman, psychologist and Nobel Laureate Generally speaking stocks struggle in 1H of the year due to uncertainty Markets usually find a bottom once a clear cut winner emerges. 2016 has seen some similarities but is trading to the economy, global issues, and monetary policy. One pattern that did stick out- The three month return in markets ahead of the election has predicted 19 of the 22 outcomes since 1928 (S&P at 2174 on August 1). Gavin Maguire- Event Trader (EVENT) Gavin Maguire- Event Trader (EVENT) Elections and Recessions Last recession was December of 2007 Since 1854 the U.S. has never gone three elections without a recession. There have been 14 recessions since 1928 11 (79%) have started after elections Median avg 8 months Mean 8.4 months Gavin Maguire- Event Trader (EVENT) Elections and Markets Dow Jones has ended higher in 15 of last 21 Presidential terms (Dec after election thru Nov of election). Three of the six declines include Hoover (Great Depression), Carter (Oil Crisis), Bush 43 (Great Recession). Dollar has been in a downward trend since 1985. Since Bretton Woods 7 of 10 terms have seen Gold go higher (Reagan 1st, Bush 41, Clinton 2nd). Silver has followed same pattern as gold. Oil prices have been higher in 80% of terms (JFK/LBJ, both Reagan terms which was post oil crisis). Gavin Maguire- Event Trader (EVENT) Who is better for Markets an the Economy? ‘Historically, whether Republican or Democrat occupies the White House has no statistically significant impact on U.S. equities’- Ross Koestrich, head of asset allocation at Blackrock ‘Most studies show quite an advantage for equities following the election of Democrats but a Federal Reserve study