The question for many traders is how will the US stock market react to the results of the 2020 election? The outcomes are varied and could generate a surprise that could create significant volatility. The major themes surround the trade war with China, Taxes on individuals and capital gains. What investors need to consider is what is currently priced into the market, and what a surprise will do to prices and volatility.<\/p>\n
Trade War<\/p>\n
In early October a Chinese trade delegation is scheduled to arrive in the US and restart trade negotiations.\u00a0 This latest round of negotiations between the US and China is schedule just ahead of the next round of tariffs are expected to come into effect. New trade tariffs were originally planned for October 1 but were pushed back by President Trump. This have been generating volatility for both stocks and ETFs<\/a>.<\/p>\n
Recent US economic data has been mixed, but many of the forward-looking indicators are pointing to a slowdown. According to the National Association of Business Economics<\/a> the Trump administration\u2019s trade war, is leading to a recession. Additionally, in October the Institute of Supply Management (ISM) released both its manufacturing and services surveys that both point to a slowdown. The manufacturing index is printing a reading that shows a contraction is underway. US manufacturing activity dropped to more than a 10-year low in September and a sharp slowdown in service-industry growth to levels last seen in 2016.<\/p>\n