America's fiscal faultline
With the US election nearing, Aussie investors are bracing for market volatility. But the biggest concern remains unaddressed by either candidate, says Citi's global macro strategist.
We’re now less than 30 days away from the conclusion of voting in the US election, and Australian investors (and everyday citizens) could be forgiven for feeling anxious about the outcome. From a cold, hard market perspective, however, one concern should stand out above the rest — and neither candidate for the White House has any concrete plans to address it.
“The thing that you really need to fear, the thing that really keeps me up at night, is the US fiscal position,” Citi’s global macro strategist Jim McCormick told an audience of investors in Sydney on Tuesday. The problem is that neither Donald Trump, Kamala Harris nor US voters seem to share that concern, McCormick lamented at the Citi Australia and New Zealand Investment Conference.
For those of us watching from Australia, it might seem that the US election has been dominated by culture wars and assassination scares. But the economy remains the top issue for voters, and on that issue Trump appears to have the upper hand.
Some recent polls suggest the Harris honeymoon has faded somewhat, with Trump equal or slightly ahead in key battleground states that will ultimately decide the outcome. He’s also currently favoured in betting and prediction markets, with his odds of victory narrowing significantly in recent days. And his perceived strength on the economy seems to be a big part of that.
