The 2024 election will determine if US domestic and foreign policy stays on course or changes direction. If former President Trump is the Republican nominee and wins re-election, that could mean higher tariffs, tighter borders, and an “America first” foreign policy.
The current top contenders, Presidents Biden and Trump, would each be a second-term President. First-term Presidents must be mindful of the economy to be re-elected, but second-termers may be incentivized to focus more on international interests or sealing their legacy for the history books.
Equities typically perform better in the first year of a second term than a first term. But they often post lackluster performance near the end of a President’s second term when succession uncertainty rises.
Domestic vs Foreign
In 2024, neither party appears anxious to reform Social Security or allow provisions of the 2017 tax cuts to sunset in 2025. As a result, the wide gap between fiscal spending and revenues, known as the budget deficit, that has existed since 9/11 and the Financial Crises of 2008, is apt to persist until pressure mounts to do something about it.
Meanwhile, the change in Russia’s relationship with the West and US-China tensions have resulted in geopolitical uncertainty being higher than US economic policy uncertainty.
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