Hillary’s Health Problems, a Stock Market “Landmine”
Investors are nervous after Friday’s action, it was the worst selloff in 3 months for equity and debt markets, and another stress to ponder after concerns over Hillary Clinton’s health flared up Sunday.
The Democratic presidential nominee, whose polling edge over Donald Trump has soothed traders who fear ruptures to US policy and see virtue in political gridlock, is suffering from walking pneumonia.
Mrs. Clinton, 68 anni, was prescribed antibiotics and advised to modify her schedule so she can rest.
Volatility is already resurfacing in markets that had purred along for 2 months inured to everything from politics to weakening global growth, with the S&P 500 Index getting jarred Friday out of its tightest trading range ever in a selloff that erased about $500-B of share value.
While investors and analysts were reluctant to speculate on Mrs. Clinton’s health, they said expectations had been a factor in the market’s Summer calm and predicted the scrutiny will intensify.
Speculation central banks are losing their taste for extra stimulus Friday tore through the blanket of tranquility that has enveloped global markets.
The S&P 500, global equities and emerging-market assets dove at least 2% in the biggest fall since Britain voted to exit the EU. The yield on the 10-year T-Note jumped to the highest since June and the USD almost erased a weekly slide.
The extent to which investors have been able to ignore politics is illustrated by the CBOE Volatility (VIX) Index, the options-derived gauge of price turbulence that in August recorded one of its lowest monthly averages since the Bull market began on 9 March 2009.
A measure of cross-market volatility encompassing equities, rates, currencies and commodities overseen by Bank of America hit its lowest level of the year last week.
To many Bears, the calm indicated complacency and that’s what gave rise to Friday’s Southside action, with diving stock and bond markets the predictable consequence of central bank policies that have allowed investors to ignore anemic economic growth, falling earnings and rising share valuations.
US stocks started Friday trading above 20X annual earnings, one of the highest multiples since the internet bubble.
Mrs. Clinton’s sudden departure from the 9/11 Remembrance ceremony in New York Sunday, and a bystander’s video showing her stumble as she was helped into her van by aides and Secret Service agents is sure to resurface health questions.
She blamed recent coughing on allergies, but Republicans and some Democrats are raising questions about her fitness for office, particularly following a concussion in Y 2012 that resulted in a blood clot.
If Hillary Clinton’s health becomes a larger factor with regard to voter decision-making, the market may have to recalculate the risk-reward of a regime change in the White House. This is another thing that is going to draw closer Wall Street attention.