When we know on Wednesday who is the winner of the American elections of Super Tuesdaythe market will still have to go through a quarantine to confirm if 2024 will be a good year for the stock market and, in addition, the curse of even years is erasedafter significant losses in stocks in Europe in 2018, 2020 and 2022.
Whoever wins the White House, expect Republicans and Democrats to continue to perpetuate the fiscal indiscipline of not dieting or exercising after increasing their debt to record levels. morbid. ANDThe debt of the largest economy has doubled compared to pre-Lehman levels to reach almost 125% today.. And most surprisingly, there has been no budget surplus since Clinton presided over the longest period of peacetime economic expansion in U.S. history, with three years without an increase in debt: 1998, 1999 and 2000.
I emphasize that the market will be in quarantine after the election because there is very little upside left over the course of the year. And the important thing is that you don’t lose what you achieved during the exercise. For this to happen, beyond the electoral results and monetary policy, the backbone to consolidate what we have achieved this year is that the cruising speed in improving profits is not reduced.
A European investor’s moderate and aggressive portfolios must have accumulated to what extent We had between 6 and 10% profitability this year. About one hundred to two hundred basis points more profitability than expected at the start of the year. This is why I believe that if corporate profit growth estimates continue to be confirmed in official earnings presentations, the market will pass the quarantine that will allow it to corroborate the profits already made.
The race to interpret where the price of money will be, for me, goes to the background. As I have said before, due to the fiscal indiscipline of whoever wins the White House, the Federal Reserve has the paper enough to make their decisions in a booming economy. Recall that at the end of last year, the expectation of seven falls in the price of silver brought the ten-year American bond to 3.75%. It was almost 5%. It is now 4.3% and leads to losses over the year.
Oddly enough, it’s halfway between the best and worst time to attend. I’ve already emphasized my confidence in Trump and Harris’ fiscal indiscipline, but I’m also sure there will be more rate cuts. If this happens, the dollar should weaken. So better US bond income, at these levels, in euros.
