Election 2024: StoneX Strategist Outlines Market Protection Playbook

Key Takeaways:

  • The 2024 US election could significantly impact market dynamics
  • Protection strategies are considered for market that have advanced
  • Potential policy shifts from different outcomes may affect sectors differently

As the 2024 US election approaches, investors face a complex landscape of potential market shifts and policy changes. Kathryn Rooney Vera, Chief Market Strategist at StoneX, offers insights into navigating this uncertain terrain and strategies that may protect recent market gains.

The current market environment, characterized by resilience in the face of geopolitical and monetary policy challenges, may be reaching a critical juncture. "It's time to protect your gains," Rooney Vera states, noting that while a soft landing for the US economy appears possible, risks are currently underpriced.

StoneX's analysis suggests several strategies for investors to consider:

  • If holding risk assets consider protection through options and strategic positioning in utilities and the belly of the US Treasury curve
  • Long steepeners in rates may perform well regardless of electoral outcomes
  • Be prepared for potential policy shifts under different election scenarios, including changes in corporate tax rates and regulatory approaches

The StoneX team currently estimates a 60% probability of a Trump win versus a 40% chance for a Harris victory. Either outcome could bring significant policy changes, particularly in areas such as industrial policy, tariffs, and regulatory regimes. Under a Trump presidency, investors might expect a focus on deregulation, lower taxes and a potentially inflationary environment. Key sectors to watch under such an outcome would include banks, industrials, and defense.

A Harris administration could see a push towards green energy and domestic manufacturing, with potential implications for sectors such as utilities and electric vehicle infrastructure.

Regardless of the election outcome, Rooney Vera emphasizes the importance of maintaining a flexible investment strategy. "The steepener, utilities, gold, and protective put options” are protection options, and are best considered when- “times are good," she noted.

As the election approaches, investors should stay informed about potential policy shifts and their market implications. StoneX's analysis provides a framework for navigating these challenges.

Dive Deeper

For more in-depth analysis on global market trends and investment strategies, subscribe to "Macro Strategy by Kathryn Rooney Vera". This comprehensive suite of reports offers expert insights on socio-economic and political trends influencing global markets, authored by StoneX's Chief Strategist.

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