The stock market is set to open tomorrow amidst the upheaval of President Joe Biden’s announcement that he will not seek reelection, a decision that is expected to trigger significant market volatility.
Berkshire Hathaway currently holds $234.6 billion in U.S. Treasury bills, surpassing the Federal Reserve’s holdings of the same asset.
Biden’s choice to step down amplifies economic uncertainty as Democrats quickly rally behind a new candidate, with Biden reportedly endorsing Vice President Kamala Harris as the potential nominee.
“If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty,” said Josh Thompson, CEO of Impact Health USA, in comments to Yahoo Finance over the weekend. “Investors typically favor stability and predictability, and a major political change like this would disrupt both.”
Such uncertainty could lead investors to seek refuge in safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic instability.
Additionally, the so-called “Trump Trade,” which has seen increased activity since Donald Trump, the former president and current Republican hopeful, outperformed Biden in a recent debate and survived an assassination attempt, might experience a slowdown.
The Trump Trade reflects market behaviors and investor strategies tied to the potential for a second Trump administration. During his presidency, Trump favored business interests, and sectors expected to benefit from a renewed Trump presidency include healthcare, banking, cryptocurrency, oil stocks, as well as Tesla and Trump Media and Technology Group.
“Should Biden exit the race, we would not immediately alter our electoral odds (60% Trump vs. 40% Biden/Dem). We could witness a pause in the recent ‘Trump trade’ as the market re-evaluates the election landscape, but we do not anticipate a wider market reaction,” noted Ed Mills, a policy analyst at Raymond James, in a recent message to CNBC.