Xtrade US election outlook: No return to Pre-Recession normality?

The markets are preternaturally quiet ahead of the US election. What is Xtrade’s US election outlook and insights on the US economy during this pre-election period?

31 October, Xtrade – The US Presidential Elections are approaching with markets leaning towards a Clinton win. The outcomes of the election are significant, since it will not only impact the Fed’s monetary policy but will also set the tone for the US foreign policy. Consequently, the Forex market participants are preparing for volatility ahead of the US election.

In light of the event, AtoZ Approved Forex Broker Xtrade is not taking any additional risk management precautions and we will operate as usual. Nevertheless, traders are warned for market spikes and are advised to remain cautious. Also, during this pre-election period, which has been notable for several market-related aspects:

  • Electoral and personal economic perceptions are widely divergent with strong political dissatisfaction being held in conjunction with widespread expressions of confidence in economic surveys. While over half of all Americans are very or somewhat stressed by the presidential race, unemployment, CPI inflation, poverty and earnings growth are at pre-Great-Recession levels and share prices up some 200% from their 2009 lows (though labor participation rates are desultory and the asset-bubble economy is penalizing savers).
  • Markets are otherwise preternaturally quiet. Cash levels held by money managers are at abnormal levels. Mid-late October witnessed some of the lowest-volume trading sessions of the year, evidencing a lack of participation and interest, portending a steady build-up of market anxiety that could lead to a period of unpredictable activity later.

Xtrade US election outlook: No return to Pre-Great recession

Looking forward, while the equity valuation focus can be expected to return to the traditional earnings growth, this year’s unusual correlation of share price with dividends is likely to largely continue for as long as interest rates remain at historic lows. Additionally, the continued outsize role played by the Fed and other central bankers in currency and commodity valuation is both a warning of and a testament to the dangers inherent in our current trading environment.

While (expected) President Clinton has a “stellar” trading record, parlaying a $1,000 futures account into $100,000 in ten months, her campaign-trail rhetoric and voter base have been decidedly non-friendly to business and trade. An expected Republican retention of the House may blunt the outcome’s worst excesses, but return to a pre-Great Recession “normality” is not imminent.

About Xtrade

Xtrade is an award-winning provider of desktop and mobile trading services, featuring CFD trading on stocks, national stock indices, commodities, and currencies. The brokerage’s financial technology includes five digital trading platforms, all of which are available in over 40 languages to traders from Europe, Asia, and the Pacific. Other prominent services include an award-winning trading education center, breaking financial news in real time, and pioneering trading tools. Xtrade’s Global Ambassador is Cristiano Ronaldo of Real Madrid. The brokerage is regulated by the EU’s Cyprus Securities and Exchange Commissions, the EU’s Markets in Financial Instruments Directive, and the Australian Securities and Investment Commission.  

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