2020 was a year that almost all of us want to forget. wasn't it?
We saw a lot of controversies, violence, the drama between Steem and Hive, and most obviously a pandemic that is literally invading the world.
However, this year is not over and there is one more pivotal event that has already started and that is the US election.
I'm not an American and obviously have no dog in this fight but I'm pretty interested in how this election could have severe impacts on the stock markets and economy in general.
I watched many analyses. Some of them expect Trump to be the best for the economy and the stock markets, and others prefer Biden.
Despite this polarization, there is one SURE thing that everyone agrees on, and that is that the WORST ever scenario we can encounter is a contested election.
Markets HATE uncertainty and nothing is more uncertain than who will be the president of the united states.
Is something like that possible?
Well, this is the first time in history that people are voting during a pandemic which by many accounts is now into the second wave in many countries.
Given that people are naturally fearful of standing in crowded lines, there is a record number of votes cast by mail-in ballots, according to CNBC, there is more than 94 million ballots have been cast, and given that they're sent via the mail, they do take time to be received, verified, and counted.
So, there is a high possibility that it will take several days to know the election results.
This without doubt creates tumultuous uncertainty.
Even worse, Trump has hinted more than once that he will reject the results of the postal voting and that means the election can be actively contested which leads that it will have to go to the supreme court. Can you imagine the potential uncertainty it could bring to the markets should this process be strung out for a fortnight or more?
It is not an imaginary scenario. In fact, there is a precedent for this back in 2000 with the Gore vs. Bush election.
At that time, during the first two weeks after the election, the Dow sold off over 5%
This time, the exact size of the potential fall from this particular scenario is hard to tell. It depends on how long the battle will last how nasty it is.
However, if there is anything to learn from this year is that we must expect the unexpected.
Even the Swiss Bank (UBS) has warned clients that they should prepare for this potential contested election by buying Gold.
So, yes, do be aware that this is likely to harm and drive down the equity and maybe our beloved crypto markets too.
What do you guys think about this election?
I'm really keen to know your opinions and thoughts.
Thank you for reading :))
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