US Elections: Markets to experience volatility amid uncertain results - Morgan Stanley

FXStreet notes that with the US election just about a month away, there's evidence piling up to support the view that investors need to prepare to not know the results on election night. Michael Zezas, Head of US Public Policy Research at Morgan Stanley, shares advice for investors.

“Voters appear poised to vote by mail in record numbers, and it appears likely that most of those voters will favor Democrats on the ballot. This puts in play a dynamic where the early vote count on election night in key states, which may reflect in-person voting first, may show results favoring Republicans, but then over time that lead could erode. Markets could naturally struggle with this uncertainty, swinging back and forth between pricing in Democratic and Republican policy paths.”

“Expect uncertainty, and volatility, but resist the temptation to react too quickly.”

“The guidance from our colleagues continues to be to look through the noise, and instead to the medium-term trajectory of US policy and its impact on the economy. Most outcomes, in our view, ultimately will result in fiscal support for the economy. This should help the US continue its recovery from the COVID-19 recession deep into 2021, and equity prices should move along with it.”