As Donald Trump and Joe Biden vie for the presidency, investors are weighing the potential impacts on sectors like electric vehicles and long-term interest rates.
Trump’s unpredictable style historically led to sharp market fluctuations, favored by some hedge funds adept at capitalizing on such volatility, reported Bloomberg.
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While markets generally dislike uncertainty, hedge funds see opportunity in Trump’s potential return, recalling the rapid market shifts during his previous term fueled by unexpected policy announcements and social media posts, the report noted.
Volatility has persisted during Biden’s tenure due to factors like inflation, geopolitical tensions (Russia-Ukraine war) and Federal Reserve policies.
Looking ahead, potential clashes with Republicans over issues such as the debt ceiling could further unsettle markets if Biden secures a second term.
Despite the election months away, markets are already bracing for heightened volatility. Trump’s policies, including the renewal of tax cuts, stricter immigration enforcement and proposed tariffs, could amplify market fluctuations. Discussions of increased influence over the Federal Reserve add another layer of uncertainty.
“The consensus view is that Trump will create volatility,” Vineer Bhansali, founder of the Newport Beach, California-based asset-management firm LongTail Alpha, told Bloomberg. “The market is already priced for that to happen.”
“We in markets love volatility — but we do try not to get too hung up on the amplified emotion that will come from a Trump presidency,” said George Boubouras, head of research at hedge fund K2 Asset Management Ltd., according to Bloomberg.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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