In a tweet, president Trump announced that he and the first lady tested positive for Covid-19. Given the president’s age and other concomitant illnesses, this raised serious concerns for his health.
The reaction of the markets should have a good reason for fluctuations
In normal times, one would expect that empathy and concern would be the only response we would hear to such an announcement. Donald trump may divide the nation politically, but he is still a person, and Americans are usually very proud of their fake empathy for the plight of others.
While there will be a lot of sympathy, there will be those who take the cynical “deserved” approach. Those who have always claimed that Covid-19 was a kind of deception of the Democrats are likely to say that this is all part of a deep state plot to seize power.
Let’s skip the conspiracy theories and just see what this news means for the market.
The initial reaction in the futures market was fairly predictable. When the news broke last night, S&P 500 futures fell sharply. In parallel with them, prices for PTS and other cryptocurrencies decreased.
This was somewhat obvious and predictable, but the questions for investors are: was this fall logical and can we expect it to continue, at least until we know the outcome of the President’s infection?
Logically, the evidence suggests that the party that controls the White house has a much smaller impact on the economy than you might imagine. Of course, the entire global financial system depends on the policy of the United States, but if you take a separate case, such as this, what does logic have to do with it?
Of course, these are not normal times
However, perception is more important than reality in any market, at least in the short term, and despite all the evidence to the contrary. So when an incumbent Republican candidate falls ill with such a potentially serious illness shortly before the election, the market drop is predictable, if not necessarily justified.
In this case, even more than at any other time, it may also continue for a certain period, especially if the President’s condition worsens. If this happens, it will be seen as a giant metaphor for what is happening in the country as a whole. Attempts to ignore the virus have led to a surge in infections, and it’s hard to miss the symbolism of the one who most urged it to be ignored.
The most important thing for investors here is that you put aside your own political views, whatever they may be. Let’s hope that the President’s illness will be short-lived and not severe, but even so, it will take him out of the campaign for at least two weeks and lead to further doubts about his decision-making. Given the Republican bias inherent in the us market, this shortcoming is likely to lead to further losses, unless the news from the White house is very good. Naturally, this will be reflected in the world markets, including the crypto market.
However, in the longer term, whether this will affect the election or not, and even who will eventually win, is almost irrelevant to the market. The US economy, which has always proved that it can go to extreme lengths to thrive, no matter which party is in power, will be fine. At least for the near future. Believe me. So, although you should not rush to buy, at some point any drop will be an opportunity for long-term investors to buy cheap stocks and cryptocurrencies on dips.
