Because the US election approaches tomorrow, historical past reveals little long-term impression from election outcomes, whereas world financial forces like SNB income and ChatGPT’s vitality calls for drive market dynamics.
On the eve of the US election, it’s value remembering the next chart. In the long term, electing one candidate over one other has had little impression on the S&P 500 index.
Whether or not the occupant of the White Home is Republican (in purple) or Democrat (in blue), the S&P 500 has continued its regular upward development.
Supply: Ritholtz
In the meantime, US Debt Prices Are Surging
The outlook for US public debt is worsening, as web curiosity funds as a proportion of GDP are projected to achieve a file 4.6% subsequent yr.
This may symbolize greater than double the degrees throughout World Warfare II and exceed the historic peaks reached within the Nineties.
This determine can also be far increased than web curiosity as a proportion of GDP throughout all 38 OECD nations.
In nations the place curiosity prices are comparatively excessive, like Greece, Eire, Spain, and Portugal, curiosity/GDP ratios are anticipated to be half of the US degree.
To make issues worse, these projections count on a decline in rates of interest over the approaching yr.
Supply: The Kobeissi Letter, OECD, Tavi Costa
US Army Spending Accounts for Over 50% of International Protection Spending
Regardless of its flaws, the greenback will not be collapsing and stays the world’s reserve forex and by far the dominant forex as a medium of alternate.
Why? 1) The US share of world GDP stays excessive (25% as of in the present day); 2) Individuals proceed to belief US regulation; 3) The standard of US property; 4) The US is a web exporter of and liquefied ; 5) The US accounts for over 50% of world protection spending.
Questions: 1) Will the brand new administration cut back navy spending? 2) Can the US afford all this spending?
Authentic Put up
