The letter in which U.S. President Joe Biden announced his withdrawal from candidacy is being displayed on a mobile phone screen in front of a computer screen displaying a photo of President Biden and US Vice President Kamala Harris, on July 21, 2024 in Ankara, Turkiye.
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Michael Brown, senior research strategist at Australia-based broker Pepperstone, told CNBC the withdrawal was largely expected, given mounting pressure from Democrats and a “disastrous debate performance.”
Brown said he expects volatility across asset classes, given that uncertainty has been injected into the election, with the race for the White House now considerably more open. The strategist predicted that the U.S. dollar would soften as some of the Trump trade unwinds, adding that he believes the prospect of a Democratic victory has marginally increased.
He also expects stocks will fall in the near term, but noted any dips should be seen as medium-term buying opportunities, given that the Federal Reserve is still expected to cut rates, and both economic and earnings growth remain resilient. The U.S. is slated to report its personal consumption expenditures price index numbers — the Fed’s preferred inflation gauge — for the second quarter on Thursday.
David Roche, president of Quantum Strategy, said in a note early Monday that Harris is likely to be endorsed by the Democratic Party, pointing out that “changing Harris at this point would be even greater chaos and would raises a lot of issues about existing funding for the joint Biden Harris ticket.”
Roche said, however, that a Harris nomination increases the chance of a Trump victory, but lowers the odds of the Republicans winning both houses of Congress.
A whole new race
In contrast, Charles Myers, founder and CEO of advisory firm Signum Global Policy, took a different position on Harris’ potential nomination.
Speaking to CNBC’s “Squawk Box Asia,” Myers said Harris being the front-runner for the Democratic nomination has made it “a whole new race.”
“There’s a new candidate with an enormous amount of unity and enthusiasm behind her. She’ll be a key driver of women, young people, Black voters … I think people will underestimate her,” he added.
Harris has already made history as the first woman and first Black person to be vice president. If she wins the Democratic nomination, she would become the second woman to run for presidential election, following Hillary Clinton in 2016.
“I think that it’s a bit too early for the markets to declare victory for Trump, and I think she’s going to give him a real run for his money,” Myers said.
Like Pepperstone’s Brown, Myers adds that the Trump trade is at risk, at least in the short term.
By the time the Democratic National Convention begins on Aug. 19, Myers said Harris will have selected a running mate, predicting she will “win the nomination with an enormous amount of momentum,” allowing the vice president to pull ahead of Trump in the polls.
“It’s been a pretty good run in a number of the names and other asset classes that are associated with the Trump victory, but also sitting this far out and with a race that has just been thrown into complete disarray … I’d be very wary and a bit cautious assuming that Trump is just going to sail to victory.”