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Market Outlook: Forget About Political Noise And Follow The Data

Market Outlook: Forget About Political Noise And Follow The Data

The market has been dancing to the tune of political developments lately. The coronavirus stimulus negotiations are having a material impact on prices in the short term, and investors are clearly worried about the coming elections and what they could mean for the stock market going forward.

Politics is important. As citizens, we should always be mindful of what is going on in the political scenario and we should always try to make well-informed and conscious decisions when the time to vote comes.

As investors, however, we should rather focus on variables with a proven and measurable impact on markets, and this does not include political speculation.

As opposed to trying to predict the future evolution of prices, investors should rather focus on assessing the market environment and adapting to it. The statistical evidence shows that momentum is a pervasive phenomenon in the market, and the momentum indicators are currently bullish for stocks.

Speculation Can Be Hazardous To Your Wealth

It is not that political developments are irrelevant to the stock market, they do matter, and sometimes they matter a lot. However, history shows that trying to make investment decisions based on political considerations tends to backfire more often than not.

Let’s take a look at a few noteworthy examples. On March 6, 2009, the Wall Street Journal published an article on how Obama’s radicalism was killing the stock market. As it turns out, this was a spectacular buying opportunity in retrospect.

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Before Trump won the election in 2016, investment banks were predicting a decline of 10% to 15% in case this happened. During the night when Trump won the election in 2016, the stock market futures were plunging. That same night The New York Times published the following paragraphs by Paul Krugman:

It really does now

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Analysis: Taking a page from authoritarians, Trump turns power of the state against political rivals

Analysis: Taking a page from authoritarians, Trump turns power of the state against political rivals

President Donald Trump’s order to his secretary of state to declassify thousands of Hillary Clinton’s emails, along with his insistence that his attorney general issue indictments against Barack Obama and Joe Biden, takes his presidency into new territory — until now, occupied by leaders with names like Putin, Xi and Erdogan.

Trump has long demanded — quite publicly, often on Twitter — that his most senior Cabinet members use the power of their office to pursue political enemies. But his appeals last week, as he trailed badly in the polls and was desperate to turn the national conversation away from the coronavirus, were so blatant that one had to look to authoritarian nations to make comparisons.

He took a step even Richard Nixon avoided in his most desperate days: openly ordering direct immediate government action against specific opponents, timed to serve his reelection campaign.

“There is essentially no precedent,” said Jack Goldsmith, who led the Justice Department’s Office of Legal Counsel under President George W. Bush and has written extensively on presidential powers. “We have a norm that developed after Watergate that presidents don’t talk about ongoing investigations, much less interfere with them.”

“It is crazy and it is unprecedented,” said Goldsmith, now a professor at Harvard Law School, “but it’s no different from what he has been saying since the beginning of his presidency. The only thing new is that he has moved from talking about it to seeming to order it.”

Trump’s vision of the presidency has always leaned to exercising the absolute powers of the chief executive, a writ-large version of the family business he presided over. “I have an Article II,” he told young adults last year at a Turning Point USA summit, referring to the section of the Constitution that deals with the president’s powers,

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UK and Ukraine sign Political, Free Trade and Strategic Partnership Agreement

UK and Ukraine sign Political, Free Trade and Strategic Partnership Agreement

The UK Prime Minister Boris Johnson today signed an agreement with President Volodymyr Zelenskyy of Ukraine to strengthen the political and trade ties between the two countries.

Boris Johnson and Volodymyr Zelenskyy have signed the ‘Political, Free Trade and Strategic Partnership Agreement’ to strengthen UK cooperation in political, security and foreign matters with Ukraine, while also securing continued preferential trade for businesses and consumers.

This agreement, when brought into force, will allow businesses to continue trading as they do now after the end of the Transition Period. It delivers the same level of liberalisation in trade, services and public procurement that businesses currently enjoy under the existing EU-Ukraine Association Agreement.

And it underlines the UK’s support for Ukraine’s sovereignty and territorial integrity, as well as both countries’ commitment to strengthening democracy and human rights and deepening the security relationship.

Prime Minister Boris Johnson said:

The UK is Ukraine’s most fervent supporter. Whether it’s our defence support, stabilisation efforts, humanitarian assistance or close cooperation on political issues, our message is clear: we are utterly committed to upholding the sovereignty and territorial integrity of Ukraine.

The Strategic Partnership Agreement we signed today signals the next chapter in our relationship. It’s a chapter that will bring increased security and prosperity for both the people of the UK and Ukraine.

Trade between the UK and Ukraine was worth £1.5 billion in 2019. Top UK goods exports to Ukraine were aircraft (£79m), medicinal and pharmaceutical products (£61m) and cars (£52m). The UK imported £177 million of cereals and £182 million of iron and steel in 2019.

International Trade Secretary, Liz Truss, said:

Free trade is an incredibly powerful agent of economic growth, opportunity and human progress. This agreement enables our two countries to continue working closely together, both on a political level and in the

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Harris, Pence defend their tickets with an eye on their political futures

Harris, Pence defend their tickets with an eye on their political futures

Vice President Mike Pence, Democratic vice presidential nominee Sen. Kamala Harris and moderator Susan Page participate in the vice presidential debate in Salt Lake City. <span class="copyright">(Justin Sullivan / Pool Photo)</span>
Vice President Mike Pence, Democratic vice presidential nominee Sen. Kamala Harris and moderator Susan Page participate in the vice presidential debate in Salt Lake City. (Justin Sullivan / Pool Photo)

Kamala Harris stepped into the highest-profile moment of her political career Wednesday night, deploying what she has long touted as her superpower: her ability to “prosecute a case” against the Trump administration.

In her debate with Vice President Mike Pence, Harris used her skills as a former prosecutor to attack President Trump for his handling of the coronavirus crisis and the economy with a clarity that eluded her running mate, Joe Biden, in his chaotic debate with the president last week.

“The American people have witnessed what is the greatest failure of any presidential administration in the history of our country,” she said, decrying the administration’s “ineptitude.”

The debate — far tamer and more coherent than the Trump-Biden slugfest — may not make much difference in the outcome of this fall’s election, but it could count as Harris’ first audition for the next one.

As running mate to the 77-year-old former vice president, Harris is in the pole position for a future presidential bid, but she will not be uncontested in what will likely be a fierce internecine fight between progressives and more centrist Democrats.

Harris’ debate performance was “very helpful to the ticket going into November. It’s also helpful to her brand when you look to November and beyond,” said Cornell Belcher, a Democratic pollster.

Pence headed into the debate in a similar position: As vice president, he should be Trump’s political heir, but other ambitious Republicans, including some who share the president’s last name, are already eyeing the post-Trump White House.

The debate tested Pence’s unshakable loyalty to Trump, which is his strongest claim to the future support

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Motley Fool to close Hong Kong business due to political uncertainty

Motley Fool to close Hong Kong business due to political uncertainty

HONG KONG, Oct 8 (Reuters)Investment news site Motley Fool will shutter its Hong Kong operations due to the uncertain political outlook in the Asian financial hub, according to a post on the company’s website earlier this week.

The move adds to ongoing concerns about the media and the investment environment in Hong Kong, following the implementation in late June of a new national security law, imposed by China, which introduced severe penalties for anything deemed as secession, subversion, terrorism and collusion with foreign forces.

The post, by Hayes Chan, Motley Fool’s Hong Kong lead analyst cited last year’s protests, the introduction of a National Security law and the United States and China’s economic decoupling as reasons for the uncertainty.

“With all those uncertainties, it’s hard to make predictable decisions to grow our Foolish business here over the next 3-5 years,” the statement said.

Hong Kong’s leader Carrie Lam has said journalists can report freely if they do not violate the security law.

The New York Times said in July it would move roughly a third of its staff to Seoul due to the political uncertainty and difficulties staff had in getting work permits.

Other Asian cities are hoping to lure financial business from Hong Kong, but financial institutions have, so far, not made any major public moves.

Tokyo is the only other Asian city where Motley Fool currently operates. The investment advisory service closed its Singapore business last year as regulatory requirements rendered it commercially unviable.

(Reporting by Alun John; Editing by Simon Cameron-Moore)

((Alun.John@thomsonreuters.com; +852-28415827;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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