US presidential elections outlook: Implications for policy and markets
Jan 9, 2024
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Goldman Sachs' Joe Wall and Alec Phillips discuss the implications of the US presidential elections on policies and markets, including analyzing potential threats to Trump's nomination, exploring the impact of Trump's legal cases, key issues for voters, election year market dynamics, and potential volatility.
The primary season in the US presidential election is a pivotal moment in determining the candidates and has significant implications for policies and markets.
The economy, inflation, and voter concerns about the direction of the country are key issues that may have a greater impact on the election outcome compared to other topics like crime, immigration, and abortion.
Deep dives
Importance of Primary Season and Candidates Watched
The podcast episode discusses the upcoming US presidential election and the significance of the primary season. It is mentioned that President Biden is likely to secure the Democratic nomination, while former President Trump is expected to be the Republican nominee. The primary season is crucial in determining the candidates, and specific focus is given to Iowa and New Hampshire as the initial contests. Nikki Haley's chances of being a genuine threat to Trump's nomination are also analyzed, with winning in New Hampshire and her home state being key factors. The impact of legal cases on the nomination process and election is debated, with some arguing that it has not affected Trump's support significantly. Overall, the primary season is presented as a pivotal moment in the presidential race.
Key Issues and Voter Focus
The podcast delves into the key issues that are receiving voter attention in the upcoming election. The economy and specifically inflation are identified as top concerns, with Republicans generally perceived as having an advantage on economic issues. Crime is also highlighted as a prominent issue in current surveys, while immigration and abortion are mentioned as significant topics. Republicans are generally seen as more trusted on these issues, except for abortion where Democrats have the advantage. However, the podcast suggests that ultimately the economy and voter concerns about inflation, as well as the direction of the country, may have a greater impact on the election outcome. The influence of consumer sentiment in relation to the economy is discussed, with the observation that voters' perception of inflation may differ from official statistics, potentially affecting their confidence and sentiment.
Implications for Policy and Market Outlook
The podcast explores the potential implications of various election outcomes for policy and the markets. An all-Republican scenario is considered to likely result in the extension of Trump's tax cuts and a possible increase in tariffs, with the question of where the additional tariff revenue would be directed. A divided government or Congress would make it harder to achieve significant policy changes, requiring a more consensus-based approach. The podcast also mentions the historical market patterns in election years, highlighting the usual weakness at the start of the year and strength at the end. However, the events of January 6th during the 2020 election are mentioned as a factor that could contribute to increased volatility in this upcoming election.
As the primary season in the US presidential election kicks off this month, Goldman Sachs’ Joe Wall from the Office of Government Affairs and Alec Phillips, chief US political economist in Goldman Sachs Research, explain the issues at stake and implications for policies and markets.