{"id":88791,"date":"2024-07-26T09:59:29","date_gmt":"2024-07-26T06:59:29","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=88791"},"modified":"2024-07-30T08:55:08","modified_gmt":"2024-07-30T05:55:08","slug":"market-impact-of-biden-dropping-out-of-the-2024-election","status":"publish","type":"post","link":"https:\/\/www.ironfx-cn.com\/nl\/market-impact-of-biden-dropping-out-of-the-2024-election\/","title":{"rendered":"Market Impact of Biden Dropping Out of the 2024 Election"},"content":{"rendered":"<p><a href=\"https:\/\/www.ironfx.com\/en\/bidens-out-kamala-to-lead\/\" target=\"_blank\" rel=\"noreferrer noopener\">President Joe Biden has officially dropped out<\/a> of the presidential race, adding further uncertainty to the market outlook at an increasingly critical time. The announcement came shortly before 2 p.m. Eastern on Sunday, July 21, 2024, about four hours before U.S. equity futures opened at 6 p.m. Eastern. Biden\u2019s decision came after days of rising pressure from fellow Democrats and reports that he was thinking about stepping aside.<\/p>\n\n\n\n<p>In a post on X, formerly Twitter, President Joe Biden announced that he is withdrawing from the 2024 presidential race.<\/p>\n\n\n\n<p>\u201cWhile it has been my intention to seek reelection, I believe it is in the best interest of my party and the country for me to stand down and to focus solely on fulfilling my duties as President for the remainder of my term,\u201d Biden wrote. \u201cI will speak to the nation later this week in more detail about my decision.\u201d<\/p>\n\n\n\n<p>Since Biden\u2019s disastrous performance in his first 2024 debate with former President and 2024 Republican nominee Donald Trump, Democrats have been rallying for Biden to withdraw from the race. Now that it has happened, how will this change impact finances?<\/p>\n\n\n\n<p>Inflation has been a major concern for Americans over the past several years, with prices for everyday household goods, energy, housing, and more remaining persistently high despite the U.S. Federal Reserve\u2019s interest rate hikes. With Biden\u2019s withdrawal from the 2024 race, could we see immediate economic impacts?<\/p>\n\n\n\n<p>The answer is complex and needs a thorough analysis of politics, the stock market, inflation, interest rates, and the relationships between these factors. Let\u2019s explore these.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img fetchpriority=\"high\" decoding=\"async\" width=\"825\" height=\"344\" src=\"\/wp-content\/uploads\/2024\/07\/america-us-election-biden.gif\" alt=\"A grand monument with flags fluttering in front of it\" class=\"wp-image-88795\"\/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-causes-inflation\"><strong>What causes inflation?<\/strong><\/h2>\n\n\n\n<p>Before we can determine what a change in Democratic presidential candidates will have on prices, it\u2019s important to understand the causes of inflation.<\/p>\n\n\n\n<p>Essentially, inflation occurs when demand exceeds supply. This can occur due to supply shortages, as seen during the pandemic, or from increased demand, which happened after the pandemic.<\/p>\n\n\n\n<p>When people are willing to pay more for something because it\u2019s in demand and have the cash to spend, suppliers or retailers can increase prices. Additionally, an increase in the money supply also contributes to inflation, according to the <strong>Harvard Business Review<\/strong>.<\/p>\n\n\n\n<p>David Moss wrote: \u201cWith more cash in their pockets and bank accounts, consumers often find new reasons to buy things. But unless the supply of goods and services has increased in the meantime, consumers\u2019 mounting demand for products will simply bid up prices, thus stoking inflation.\u201d<\/p>\n\n\n\n<p>The Federal Reserve can attempt to control inflation by tightening the money supply, often by raising interest rates to make borrowing more expensive.<\/p>\n\n\n\n<p>When borrowing costs rise, businesses find it harder to get credit. The <a href=\"https:\/\/www.ironfx.com\/nl\/markets\/shares\/\" target=\"_blank\" rel=\"noreferrer noopener\">stock market may fall<\/a>, which means investors and consumers may experience less liquidity as they may not want to sell stocks at a loss.<\/p>\n\n\n\n<p>So how does all this relate to the 2024 presidential race and Biden\u2019s exit?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-political-uncertainty-and-the-stock-market\"><strong>Political uncertainty and the stock market<\/strong><\/h2>\n\n\n\n<p>Biden\u2019s withdrawal from the race brings greater political uncertainty. Questions arise about whether the president will complete his term this year and how the new candidate will fare against Donald Trump, who currently leads in many polls.<\/p>\n\n\n\n<p>Political uncertainty can lead to reduced consumer spending, as people may choose to save for an uncertain future. This could slow inflation.<\/p>\n\n\n\n<p>The Dow Jones Industrial Average fell 1.3% and the S&amp;P 500 dropped 0.8% amid speculation about Biden\u2019s exit, MarketWatch reported.<\/p>\n\n\n\n<p>Now that Biden is out, some of this political uncertainty may be resolved, potentially boosting consumer confidence. If the new Democratic presidential candidate is seen as bringing greater political certainty, the stock market could rise. This could increase liquidity and consumer spending, which could drive inflation higher.<\/p>\n\n\n\n<p>However, experts like Alejandra Grindal, chief economist at Ned Davis Research, said in a recent report, \u201cPolicy uncertainty matters for stock market returns, but by no means does it come even close to being a significant driver.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-effects-on-student-loan-debt-and-inflation\"><strong>Effects on student loan debt and inflation<\/strong><\/h2>\n\n\n\n<p>On July 18, 2024, Biden approved an additional $1.2 billion in student debt relief for public service workers, according to a U.S. Department of Education press release. This move benefits 35,000 Americans and could contribute to inflation.<\/p>\n\n\n\n<p>The future of student loan debt policies will depend on whether a new democratic candidate can win against Trump in the upcoming election. If student loan debt forgiveness continues, it could slightly impact inflation. Without student loan payments, individuals will have more disposable income to spend on consumer goods and services, which could increase demand and drive prices higher.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"825\" height=\"344\" src=\"\/wp-content\/uploads\/2024\/07\/president-biden-us-elections.jpg\" alt=\"President Biden delivers a speech at a podium with the American flag in the background.\" class=\"wp-image-88796\"\/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-real-drivers-of-inflation\"><strong>The real drivers of inflation<\/strong><\/h2>\n\n\n\n<p>During the June 27 debate, Trump accused Biden of causing recent inflation, \u201cI gave him a country with no \u2014 essentially no inflation,\u201d he said.<\/p>\n\n\n\n<p>In turn, Biden blamed Trump for a stagnant economy. In reality, <a href=\"https:\/\/www.ironfx.com\/nl\/ironfx-trading-school\/economic-calendar\/\" target=\"_blank\" rel=\"noreferrer noopener\">global events<\/a>, supply and demand, interest rates and other factors influence inflation more than the person in the Oval Office.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-5-potential-impacts-of-biden-s-exit\"><strong>5 potential impacts of Biden\u2019s exit<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-immediate-reaction-increased-volatility\"><strong>1. Immediate reaction: increased volatility<\/strong><\/h3>\n\n\n\n<p>Several experts argued that Biden\u2019s withdrawal will increase market volatility.<\/p>\n\n\n\n<p>Josh Thompson, CEO of Impact Health, said, \u201cInvestors generally prefer stability and predictability and such a significant political shift would disrupt both.\u201d<\/p>\n\n\n\n<p>He predicts an initial sharp decline in stock prices as investors look to hedge against potential risks.<\/p>\n\n\n\n<p>Michael Collins, CFA, founder and CEO of WinCap Financial, agreed, saying that that the change in leadership could lead to increased uncertainty and volatility in the market. Collins believes that Biden\u2019s exit would almost guarantee a victory for Trump.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-potential-boost-for-u-s-equities\"><strong>2. Potential boost for<\/strong><strong> U.S. equities<\/strong><\/h3>\n\n\n\n<p>Some experts suggest that Biden\u2019s exit could help U.S. equities.<\/p>\n\n\n\n<p>Timothy Holland, CFA and chief investment officer at Orion, said Biden\u2019s likely successor, Kamala Harris, might be seen as a weaker candidate against Trump. However, he believes this could actually support U.S. equities as Wall Street starts to contemplate and price in a fiscal policy backdrop with both the extension of the Trump Tax Cuts and incremental government spending, particularly on the military.<\/p>\n\n\n\n<p>Holland added that this combination could stimulate the U.S. economy and boost corporate profits in the short to intermediate term, potentially driving stock prices higher.<\/p>\n\n\n\n<p>\u201cThat said, accelerating economic growth could also push inflation higher longer-term, forcing the Fed to pivot from the expected rate cuts in 2024 to rate hikes in 2025 or 2026,\u201d he said.<\/p>\n\n\n\n<p>Stephanie Vaughan, co-founder of Veda, also said there would be positive outcomes for the U.S. equities market following Biden\u2019s departure.<\/p>\n\n\n\n<p>\u201cPicking Kamala Harris would certainly create a situation in which Trump would be more likely to win,\u201d she said. \u201cAnd Trump is clearly pro-growth and pro-innovation \u2014 both of which the American economy is sorely in need of now. Assets, therefore, would almost certainly benefit.\u201d<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"825\" height=\"344\" src=\"\/wp-content\/uploads\/2024\/07\/us-election-america-biden.jpg\" alt=\"American flags and podium set up for a patriotic ceremony\" class=\"wp-image-88797\"\/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-3-a-potential-boost-for-gold-and-silver\"><strong>3. A potential boost for gold and silver<\/strong><\/h3>\n\n\n\n<p>Peter Earle, a senior economist at the American Institute for Economic Research, suggests that any subsequent reaction will depend on the specific candidate.<\/p>\n\n\n\n<p>He explained that uncertainty around the new candidate often benefits gold and silver.<\/p>\n\n\n\n<p>Earle said, \u201cWith uncertainty about who the candidate will be, investors will seek a safe haven until they can assess whether or not the replacement for Biden will continue or break from the high (and possibly higher) tax, more regulation, and more government intervention policies of the Biden administration.\u201d<\/p>\n\n\n\n<p>He also said that until that can be determined, investors may move towards safer stores of value.<\/p>\n\n\n\n<p>Thompson agreed that a sitting President\u2019s withdrawal from a reelection race is an unprecedented event, likely to increase fear and caution among investors.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-4-impact-on-bonds\"><strong>4. Impact on bonds<\/strong><\/h3>\n\n\n\n<p>According to Holland, although the data is limited, post-presidential debate bond yields moved up and bond prices fell as Wall Street considered the possibility of a Republican Election Day sweep and the likely extension of the Trump Tax cuts, along with increased government spending, particularly on the military.<\/p>\n\n\n\n<p>If President Biden\u2019s most likely replacement is seen as a weaker candidate against President Trump, a similar pattern in bond yields and bond prices could emerge, Holland said.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-5-impact-on-crypto\"><strong>5. Impact on crypto<\/strong><\/h3>\n\n\n\n<p>Vaughan said the crypto markets might experience a rally following Biden\u2019s exit from the race.<\/p>\n\n\n\n<p>\u201cMost notably because a Trump presidency would be far more productive toward the crypto ecosystem as a whole,\u201d she said.<\/p>\n\n\n\n<h2 class=\"wp-block-heading translation-block\"><strong>I<\/strong><strong>n summary<\/strong><\/h2>\n\n\n\n<p>Biden\u2019s withdrawal from the 2024 presidential race could affect various <a href=\"https:\/\/www.ironfx.com\/nl\/markets\/\" target=\"_blank\" rel=\"noreferrer noopener\">financi\u00eble markten<\/a>. Increased political uncertainty, shifts in inflation, and changes in investor sentiment could all play a role in shaping the economic environment. As the new political scenario develops, investors should keep an eye on these changes and adjust their <a href=\"https:\/\/www.ironfx.com\/nl\/ironfx-trading-school\/forex-strategy\/\" target=\"_blank\" rel=\"noreferrer noopener\">strategies accordingly<\/a>.<\/p>\n\n\n\n<p>Disclaimer: <em>This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked in this communication.<\/em><\/p>","protected":false},"excerpt":{"rendered":"<p>President Joe Biden has officially dropped out of the&#8230;<\/p>\n<div class=\"article-readMore\"> <a class=\"more-link\" href=\"https:\/\/www.ironfx-cn.com\/nl\/market-impact-of-biden-dropping-out-of-the-2024-election\/\">Minder lezen <span class=\"screen-reader-text\">Market Impact of Biden Dropping Out of the 2024 Election<\/span><\/a><\/div>","protected":false},"author":15,"featured_media":88794,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_daim_seo_power":"","_daim_enable_ail":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-88791","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","blog-category-trending-articles","entry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.5 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>US Election: Market Impact of Biden Dropping<\/title>\n<meta name=\"description\" content=\"Explore the potential market impact of President Biden\u2019s withdrawal from the 2024 election. 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